Jim Kudis and a partner started Allegheny Petroleum Products Co. for the same reason many people start a business — they loved what they did and saw a niche that their company could exploit.
While the company, a manufacturer of industrial lubricants and additives, was seeing annual growth of 20 percent in its early years, Kudis and his partner struggled with money and didn’t take a salary for the first year or two.
“Most small businesses are generally undercapitalized, which we were,” says Kudis, president. “We lived off whatever money we had, which definitely helped because it cut back on the expenses and some of the money going out the door.”
Starting a business is 24 hours a day, seven days a week. You have to live it and love it. You have to roll up your sleeves and do anything you have to do to run that business.
“If you don’t want it that bad, don’t do it,” Kudis says.
The company’s focus in the beginning was providing industrial lubricants to the various manufacturers in the Pittsburgh area. Back then the major oil companies were retreating from the marketplace, becoming very big and going through distributors. Most of the distributors didn’t have the technical know-how of what the lubricants do and how they work.
So Kudis saw a void in what the major companies used to be strong at and what the distributors couldn’t do and that ended up being the niche that Allegheny Petroleum jumped into.
“That was the big advantage to going into the manufacturing part of the business,” Kudis says.
Last August, Kudis and Allegheny Petroleum Products Co. celebrated 25 years in business. In December 2012, Kudis bought out his partner to become the sole owner of the 85-employee company, which saw 2012 revenue north of $110 million.
Here’s how Kudis has grown Allegheny Petroleum Products Co. from a start-up into a successful organization.
Bring in the right talent
While Kudis and Allegheny Petroleum struggled with capital early on, the turning point for the company came around its fifth or sixth year in business.
“We were supplying one of the plants in Cleveland and we made a proposal to do what was a new concept at the time, fluid management,” Kudis says. “We had to put in 125 bulk tanks, which are carbon steel, 500-gallon tanks that ran about $1,500 each.
“So we had to make a more than $200,000 investment to put these tanks in and put in consigned inventory, which ran us another couple of hundred thousand dollars. So we were about $400,000 into this.”
A year later the global buyer for that company called Kudis and told him what a great job Allegheny Petroleum was doing managing their Cleveland plant. He offered Kudis the contract to manage the company’s remaining 70 plants.
“So off it went and today they are my largest customer,” he says.
From that point on, the business has had to function much differently and required new skill sets to keep the company growing.
“My biggest focus today is making sure my managers have all the tools and things they need to do their job, whereas 20 years ago I was doing it myself,” he says. “Now it’s managing people, keeping them excited, making sure they have ownership in the things that they’re doing, and have the tools to do the job that they need.”
Allegheny Petroleum has five fairly distinct areas and Kudis is in touch with each one of the people that manage those areas.
“I’m not trying to do their job, but I’m trying to help them so they can do their job and that’s the key thing,” he says. “It’s all about people.”
To find the right leaders for his business, Kudis chased those executives down and drafted them all.
“I handpicked them and coerced them into coming to work for the company,” he says. “I chose them because I saw the qualities they had. I saw a real desire in each one of them to do well, and that’s where my attention started.
“What I saw in my interaction with them was that they could handle themselves well and present themselves well in front of people. They were knowledgeable and wanted to be more knowledgeable.”
The first thing Kudis looked for in the people he brought in was whether they were good quality people and good solid citizens.
“That’s probably the common thread through most of the people who work here,” Kudis says. “Talent would be second after that — they can manage people and enjoy the ownership of their part of the business. They embrace it and treat what they’re doing like their own.
“It’s just looking in someone’s eye and seeing that they have a desire to do well, not only for themselves, but for the company too. A lot of people want to punch in, get a paycheck, punch out and go home, and that’s not the kind of people I want managing.”
Kudis gives his team the autonomy to do things on their own, which means they have the power to make decisions.
“I give them a free hand to do what makes sense,” he says. “My motto is to make the decision on your own and if you don’t think it’s your decision, then come to me. As long as you have an explanation about why you made that decision, you’re never wrong. You’ve got to be in the game and engage and make decisions.”
Decide how to grow your business
Making decisions is a very important aspect of running a business, especially when it regards growing your company to the next level. Kudis has had to make countless decisions over 25 years and each one helps the company continue its growth. Now those decisions rest on the shoulders of his managers.
“That’s what I expect from the people in a management role,” Kudis says. “In the dealings they have, there comes a point where maybe it’s beyond where they should make a decision on something. In involving putting part of the company at risk or something of that nature, every one of them knows where that line is, where that decision should not be theirs.
“All the other decisions whether they are small, large or whatever, I expect them to make it. It’s really easy to say three or four days later that you made a wrong decision, but to be in the game and make the decision right there, to me that’s important as long as they have an answer why they made a certain decision.”
Every month or every other month Allegheny Petroleum has what it calls a What’s Up Meeting to check in on the different areas of the business.
“I grab each of the managers and we sit down for about two hours and we go around the table while everyone exchanges what they’re doing,” he says. “You get so focused on the part of the business that you’re in and sometimes you have two different groups sort of working on the same things, or maybe they’re doing something that somebody in another group has worked on and knows the answers to help them out. So those meetings have been very beneficial.”
One of the biggest decisions Kudis has made for Allegheny Petroleum was to give the company a global presence. However, global business carries many challenges along with it.
“Learning how to deal financially in different countries has been a challenge,” Kudis says. “One thing you have to learn is what the tax implications are. Each country is different. You should do business with an accounting firm or law firm that can find out answers for you. That really makes it easy.”
Allegheny Petroleum didn’t utilize those resources in the beginning on the first two countries where the company launched its efforts and there were snags.
“Had I used our law firm or our accounting firm, it would have been a lot easier,” Kudis says. “Make sure you understand what it takes to do business in a foreign country before you start doing business there.”
Another big decision that has streamlined business for the company was using a global pricing index with its major direct customers.
“We now move our pricing quarterly as these prices move,” he says. “In the past every time there was an increase you had to go in and present everything to your customer and sit and argue about the pricing. Now that it’s indexed at the end of the quarter, it’s just a matter of how the pricing has moved and that has really streamlined the pricing.
“Our customers feel very good because they know it’s indexed to something that they can see. I feel good because as my raw material costs rise or drop it keeps my profits pretty steady. It really makes it easy to not worry about the pricing side of your business as much.”
Now that Allegheny Petroleum has streamlined business, entered into global markets and become a substantial player in its industry, Kudis is excited to find where the next level is.
“My vision is how do I double and triple the business,” he says. “Everything had been done organic and we might look at doing some acquisitions. The next level will also mean being more global.
“You have to think down the road and get out of the box to think about things that maybe you haven’t thought about in the past, because once you stop growing you’re done.”
How to reach: Allegheny Petroleum Products Co., (412) 829-1990 or www.oils.com
Find the right talent for your leadership team.
Give the leadership team the autonomy to make decisions.
Constantly look at how to keep growing your business.
The Kudis File
Allegheny Petroleum Products Co.
Born: Homestead, Pa.
Education: Graduated from Penn State and received a bachelor’s degree in business logistics.
What was the very first job that you had and what did you learn from it?
I worked in a steel mill. I was a laborer so I drove a high lift and moved different things around. My dad worked there and he said, ‘This man is going to pay you, so you better work so that you make sure you earn every dollar you get.’ I still live by that today.
Who is someone that you looked up to?
My grade-school basketball coach. If we played bad we would come back and practice until 11 o’clock at night to make sure we did things right. We won the state championship that year. Hard work eventually pays off.
What Allegheny Petroleum product are you most proud of?
We make what’s called a backup bearing oil for the steel mills, which is called a Morgoil. When steel mills roll steel it goes between these rolls and on the end of these rolls there are bearings. They are huge bearings that get very hot. The oil goes through to lubricate the bearings and they also cool the bearings on the outside with water to keep them from getting too hot.
So the oil has to be able to accept water and kick out the water as it goes back to the tank and it gets circulated back through the bearings. You don’t want water lubricating your bearings, so our oil kicks out the water pretty good. That’s one of our hallmark products.
If you could speak with one person, whether from the past or present, with whom would you want to speak to?
Joe Paterno. I admired the way he ran the football program at Penn State. I’m not in total agreement with what happened at the end of his career. All through the history of what he did, he represented a class act. He was very well-respected. I enjoyed watching him and what he represented for the school.