At the tender age of 20, Mark Fenner had an epiphany: he would never play professional football.
A scholarship football player at Missouri Western State College for two years, Fenner’s athletic career had ended with an injury in 1983. He needed a backup plan. After transferring to the University of Missouri and earning a degree in agricultural economics, he went to work building a three-decade career in cooperatives. Circling back to Columbia four years ago, Fenner now helms MFA Oil Co., the 18th-largest cooperative in the country and seventh-largest U.S. propane retailer.
Not bad for a backup plan.
The farmer-owned energy cooperative Fenner leads has been in growth mode for the past 3½ years, with 38 acquisitions on the books and untold more to come. MFA Oil has momentum, Fenner says, the very best kind of energy.
“We’ve bought 38 companies and still have cash in the bank and no debt,” he says. “There’s plenty of room for more growth.”
“We started out as equals,” Fenner recalls. “It was a great way to go about merging companies.”
Fenner spent 12 years at CHS, serving as the national account director for the cooperative’s south region. When Taylor brought him onboard at MFA Oil, he put him in charge of day-to-day operations of the refined fuel, propane, Petro-Card 24, American Petroleum Marketers, Break Time and Jiffy Lube operations.
“The focus, though, was on the growth of company operations,” he says. “The two years I had here before Jerry retired allowed me to get to know all of MFA Oil’s operations. We ordered analytics and metrics for every department.”
The analysis was not pretty. “Co-ops are customer-intimate,” Fenner says. “That can be a good thing, until it becomes too much of a good thing. Customers like the intimacy, but there’s a balance — you have to be more efficient. When I got here, there were many great things going on — good people, great philanthropy, great customer relationships. But we were so inefficient in our bulk fuel and propane businesses, that it just had to change. We’re trying to achieve a more efficient business culture here while retaining the important customer intimacy.”
He’d heard the stories from the “bad old days,” as Fenner puts it. In the early ’80s, the bankruptcy of an East Chicago refinery where MFA Oil was a partner had plunged the co-op into an extremely frugal mindset, where cashiers turned over the paper in their registers to reuse, and frequent deliveries continued in small trucks because larger, more efficient ones were too expensive to purchase.
A series of savvy moves brought MFA Oil out of its funk from the East Chicago refinery shutdown. The cooperative still had a stake in a refinery in McPherson, Kan., a reliable source of fuel and revenue. Break Time convenience stores, Jiffy Lube and Big O Tire franchises helped diversify operations in the 1980s and ’90s. Alternative fuels and biomass had captured the public’s attention and congressional funding. The cooperative that Fenner joined in 2012 was a wide-ranging, sprawling conglomerate of energy operations.
“The leadership of both Jerry Taylor and Dale Creach toward moving us into Break Time, Jiffy Lube and Big O Tires took us into automotive retail businesses we could be successful in,” Fenner says. “But the traditional side of our business resisted change and these businesses needed an overhaul.”
His review highlighted the need for education among cooperative members and employees. “We began a campaign to educate everyone on the new ways of how business is done,” he says. “From my past experience, I had a great example in what not to do,” he adds, citing Farmland’s bankruptcy in 2003 and the piecemeal dispersal of its divisions to other companies.
“Farmland failed because of poor management,” Fenner says. “I used my experience there as a cautionary tale.”
“Seventy percent of our income was gone,” Fenner says. “But, it was an opportunity.”
An opportunity, indeed, says Jon Ihler, MFA Oil’s vice president of sales and marketing. “His direction to replace lost earnings from the sale of the company refinery has reshaped the MFA Oil organization,” Ihler says.
The cooperative may have lost a substantial revenue stream, but the buyout offered a trade-off: cash, and lots of it.
“MFA Oil suddenly had a chunk of cash,” Fenner says.
The refinery sale also served to expose an unpleasant truth for the cooperative: refinery income had masked revenue shortfalls in the core bulk fuel operations. Fenner embarked on a two-pronged program to install efficiencies in the business operation while targeting acquisitions that could grow the cooperative and provide income.
“I was brought in to bring growth,” Fenner says. “We’re buying propane and fuel companies that bolster our core businesses. Propane is the economic engine for us; it’s more profitable, and we are performing both of these businesses in a much more efficient manner.”
It’s an investment strategy of growth and relevance, he says. Chief Financial Officer Robert Condron agrees. “Mark’s strength is that he is very strategic,” Condron says. “He has a long history in the energy industry and has a broad level of understanding of all aspects of it. Over the last four years, he has refocused MFA Oil on its core competencies and we have exited a few business that had become nonstrategic but very time-consuming for management. We are refocused on our core businesses and are investing heavily in them.”
The strategy included shedding the biomass operation in 2015 and rearranging operations to concentrate on its core bulk and retail businesses: bulk fuel, propane and lubricants; Break Time, Jiffy Lube and Big O Tires; and a partnership in American Petroleum Marketers, a branded fuel supplier selling Cenex petroleum products. “Plenty of growth opportunity in those five areas,” Fenner says.
MFA Oil also maintains a 5 percent ownership in Mid America Biofuels LLC, a biodiesel plant in Mexico, Mo. A recently formed joint venture with MFA Inc. will construct a shuttle-loader facility on the Union Pacific Railroad in Caldwell County.
“Working with MFA Inc. adds value to our side,” Fenner says.
The 87-year-old cooperative has increased in value by 50 percent over the past four years, with annual revenue up from $1 billion in 2012 to $1.5 billion today. The U.S. Department of Agriculture ranks it as the 18th-largest cooperative in the country, based on revenue. Thanks to fuel and propane acquisitions, annual sales volume has risen from 350 million gallons to 500 million gallons. “We’re looking at 10 percent growth per year, on average,” Fenner says.
The torrid pace of fuel and propane acquisitions has launched MFA Oil to a top 10 position in the fuels market; it is now the seventh-largest propane retailer in the country. “Mark has really challenged the pace of change in our organization,” says Kenny Steeves, vice president of bulk and propane plant operations. “Most co-ops are slow to move and can lose relevance in the industry over time. The additional growth in the propane division will position us for future success, while adding value to our member owners.”
MFA Oil is also adding members; the co-op boasts more than 40,000 on its rolls. “We intend for every acquisition to add members and delegates to the cooperative,” Fenner says. “That’s strength in purchasing power, which goes right back to our core mission, our reason for existence.”
The retail units — source of 90 percent of the cooperative’s business — enhance that mission, Fenner says. “We sell a ton of oil through Jiffy Lube and Big O,” he says. “We sell a lot of gasoline, too. We’re a buyer now; no more refineries. If we buy a lot of gas to sell to customers, that can get us a better deal on diesel for our farmers.”
Fenner wants to grow retail operations at 5 percent a year for unit sales. “All of our retail concepts help us run our traditional businesses better,” he says. “There are interesting retail concepts we can apply to our bulk operations — assigning expenses, paying dividends. You either pay taxes or pay patronage; we’d rather pay our farmers.”
The traditional businesses of MFA Oil — bulk fuel, propane and lubricants — have been streamlined and overhauled for efficiency. There is some autonomy — individual bulk plants budget for their needs and submit them through district managers. Fenner has instituted enterprise resource planning throughout the business, modernizing MFA Oil’s accounting, computers and other technology, and trucks.
“Mark is always challenging us to become more efficient,” says Ed Harper, vice president of retail automotive. “He wants us to look for opportunities to grow, but do it responsibly.”
Efficiencies have been painful, Fenner says. “Co-ops are held to a different standard,” he says. “We’re owned and governed by our customers. We’ve had to close some stores — probably 30 offices. They need to produce; we need to be competitive. We can’t justify maintaining tiny offices all over our trade territory. Our customers don’t want to — and shouldn’t have to — pay us more for fuel because we keep open locations that aren’t needed. That’s the painful price of relevance. There’s a discipline involved.”
FOR ALL THE TALK of strategic moves, MFA Oil doesn’t spend much time constructing long-term strategic plans. “I don’t waste time with those,” Fenner says. “You can’t do 10- and 20-year strategic plans in this business — maybe 10- or 20-month plans. We can take care of them in a few sessions for the next fiscal year.”
He likes to invoke a well-known saying attributed to management guru Peter Drucker: “Culture eats strategy for breakfast.” A self-described “people guy,” Fenner builds on relationships. “Our two Kansas properties are former customers of mine,” he notes. “The energy business may be a big industry, but it’s still about relationships and people.”
When Fenner built his executive team, he reached out to the relationships he’s maintained. “I don’t care about tenure,” Fenner says. “For me, talent trumps tenure.”
The effort led him to hire long-time colleague Condron as chief financial officer. “Mark and I have a long history,” Condron says. “We worked together for more than 15 years and then went to work for different companies but stayed in touch. When he called me three years ago, it was an easy decision for me to accept a position here. He’s done a great job of bringing in executive talent from outside the company while also promoting from within.”
The 53-year-old CEO describes his leadership style as people-centric and active. Chief Human Resource Officer Janice Serpico would add “passionate” to that list.
“I remember distinctly at an employee meeting,” Serpico says. “He was talking about safety and its importance. He showed a picture of a tank at a customer’s house that was unsafe. He praised the driver who locked and refused to fill the tank because of the safety concern. Unfortunately, we lost the customer because they did not want to fix the issues. Mark’s comment was, ‘I just wanted to walk right up and knock on the customer’s door and say, Don’t you care about you and your family’s safety? MFA Oil obviously cares more than you do.’
“In that moment, he was so passionate you could just tell it really bothered him,” she recalls. “That passion is why people love Mark as CEO.”
His passion spills over to MFA Oil’s 1,750 employees as well.
“We have great people working here,” Fenner says. “I love being here. We pray before board meetings and employee meetings. We like to laugh and have fun, too. Our culture is more about being a great place to work.”
And that is where the passion stirs. “We are tasked with continuing the legacy of this cooperative,” Fenner says. “By taking it to a more profitable path — making money on its own — we ensure that MFA Oil remains for a long time.”
A Red Ribbon Day
MFA Oil Co. celebrated the grand opening of its 33-acre Business Support Campus in Moberly on May 19. The new site houses the company’s distribution center that it moved from California, Mo., plus a maintenance department, parts and packaged goods warehouses, training center, product development and quality control lab, a 32,000-square-foot truck shop and bulk lubricant storage.
The facility, finished from the partially built sucralose factory of bankrupt Mamtek International, offered a chance for MFA Oil to consolidate several operations with room to expand.
“There’s some synergy in having all that together,” says MFA Oil CEO Mark Fenner. “These employees were in an old building where we just couldn’t stay. They deserved better.”
About 30 employees work at the Moberly site now, with more hires slated as the company grows. The old business support facility on Paris Road will be demolished to make room for a brand-new Break Time service station and convenience store, Fenner says.