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Kathy Lehne and Sun Coast Resources: A Business World Example of the Butterfly Effect

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When Sully Sullenberger landed his US Airways Flight 1549 on the surface of the Hudson River on January 15, 2009, saving more than 100 souls in the process, no one in the news media or anywhere else referred to him as a “male pilot.” Instead, he was just called a “pilot,” as he should have been.

But in April, when Tammie Jo Schults safely landed her injured Southwest Airlines Flight 1380, also saving more than 100 souls in the process, pretty much every story filed in every media outlet made certain to mention the fact that she was a “female pilot.” Despite the fact that women have been piloting airliners for 45 years now, and becoming more and more numerous in their profession over time, Schults, in the year 2018, was still treated as something of a novelty.

Someday, the airline industry will reach the point at which its pilots, male or female, will come to be identified simply by their roles, and not their gender. By the same token, we know that the same will be true for women who happen to be senior executives in the oil and gas industry. Unfortunately, the reality is that this industry lags behind most others in terms of having women in the top executive positions. Whether in the C-suite or the board room, the female voices guiding oil and gas companies remain few and far between.

A Company With No Glass Ceiling

A lack of female voices running the company is not an issue at Sun Coast Resources, Inc., and never has been, for the simple fact that Kathy Lehne, the company’s CEO, is also the company’s founder. The CEO position at Sun Coast is not a job Lehne was hired into — it’s a job she created, and at a very young age.

“When I was a senior in high school, we had a really good office vocation program — we’d go to school for half a day and then work for half a day,” she reflects. “One of my first jobs was for a fuel distribution company. I worked there my senior year and then continued on after high school, and that basically led to my decision to start Sun Coast. I was there about five years — started out answering the phones, doing inventory, issuing invoices — all the office and administrative duties.”

After moving to Houston and working in the company’s marketing arm there, Lehne was able to make an arrangement with her employer to go into business for herself. Thus it was then, at the age of 23, Kathy Lehne founded Sun Coast Resources, investing her entire life’s savings of $2,000 in the process. It was a decision made by a woman who readily describes herself as “a risk-taker” — a decision that would, in the intervening 33 years, prove to be extremely beneficial to millions of people.

The most obvious beneficiaries of Lehne’s decision to go into business for herself are the company’s employees. Sun Coast has gone from its startup as a single dedicated woman working the phones to a major employer in the nation’s fourth-largest city, now boasting a workforce of more than 1,000 employees. Hundreds of Sun Coast customers have also benefitted from the outstanding service Lehne and her team have provided for more than 33 years now.

But those who benefit from Sun Coast’s stellar service and its payroll and benefits package are a drop in the bucket compared to those who have reaped the rewards from Lehne’s visionary dedication to serving communities that have been impacted by hurricanes and other major natural disasters.

Ready to Respond Immediately When Disaster Strikes

During and in the wake of Hurricane Harvey, one of the most devastating storms to ever impact the Texas Gulf Coast, millions of Texans were left without electricity, in some cases for weeks afterward. In times such as these, individuals and businesses must rely on on-site generators to provide the energy that makes modern life possible, with most of those generators fueled by diesel or gasoline.

Sun Coast Resources has established a strong reputation for stepping into the breach during such emergencies, moving its trucks and drivers into all parts of the country in order to meet the needs of a region that has been struck by disaster. Sun Coast’s drivers and trucks were quickly in New Orleans, Mississippi and Alabama in the wake of Hurricane Katrina in 2005; the company was in New York within hours of the passage of Hurricane Sandy in 2012; in 2017, not only did Sun Coast meet the needs of the Texans impacted by Harvey, they also quickly moved its people and equipment into Florida after Hurricane Irma had knocked out power up and down the length of the peninsula, and the company also rapidly responded to the grave emergency in Puerto Rico after that island had been devastated by hurricanes Irma and, just days later, Hurricane Maria. There have been many others — Houston alone has also suffered major impacts from Hurricanes Rita and Ike in addition to Harvey since 2005 — but 2017 was the busiest and most intense time the company’s emergency response operations had ever experienced. During these crisis events, it is “all hands on deck” time at Sun Coast, and “all hands” include those of the company’s CEO.

“It can be a very chaotic situation,” Lehne says. “During the 2017 storm season, I and several others spent 60 straight days at the office — didn’t go home, slept here overnight, working to coordinate our efforts from the storm center.”

Indeed, no one should underestimate the challenges present in coordinating a company’s response to crisis events like these. It’s not just a matter of getting your truck tanks filled up with fuel and putting them on the road to the destination in question — the company’s actions must be coordinated with public officials at the local, state and federal levels, all of which play major roles in these major response events. One of the first steps, in fact, is to ensure that the company has the government-issued permits necessary to even operate in the impacted state and local jurisdictions.

The response to Hurricane Sandy required the securing of new permits in several states along the Eastern seaboard before Sun Coast could even move its trucks into the region. The effort also requires coordination with and supplying the needs of a vast array of private entities, and to that end, Sun Coast has established an entire team of people to ensure it all gets done right.

Lehne describes it this way: “We have developed a team of professionals with vast expertise, bolstered by an unmatched array of emergency response assets, to be able to respond at a moment’s notice to the needs of government agencies, companies of every sort, first responders, rescue and recovery units, police, fire departments, office complexes, frozen food lockers, grocers, hospitals, hotels, big-box retailers, fuel stations, telecommunications operations, personal residences and any other entity when power is interrupted by storms or other natural disasters.”
Sun Coast maintains a permanent storm coordination center to help minimize any delays in initiating its response to emergencies. Though dormant during the calm times, the center is maintained in a constantly ready state and can be activated immediately when needed.

As previously noted, 2017 was a terrible year for major storms in the U.S. Sun Coast’s home city of Houston was devastated by Harvey, and then, within just a few weeks, major hurricanes struck Florida and Puerto Rico as well. We asked Lehne to tell us about the kinds of logistical challenges responding to such an unprecedented sequence of events presents, even for a company as large and diverse as Sun Coast.

“There are logistical challenges with every storm, but we are fully equipped to deal with whatever Mother Nature throws our way during these times,” she says. “There are always unique logistical challenges associated with responding to those whose power from the grid has been interrupted.
“Over the decades, Sun Coast has developed extensive capabilities and expertise when dealing with natural disasters. The biggest challenge during any storm events — like Hurricanes Harvey, Irma, and Maria — is access to the impacted areas, which have been cut off because of impassable, flooded roadways. However, we have equipment that can handle high water.”

Those challenges were only amplified by the hurdles inherent in responding to the devastation of Puerto Rico, the island U.S. territory in the Caribbean Sea, located more than 1,000 miles southeast of Miami. For starters, the company had to not only obtain the permits necessary to operate within the territory; it had to figure out a way to transport its trucks and other equipment out over open seas for the first time. The answer to that logistical challenge came in the form of the U.S. military.

“With respect to Puerto Rico, we sent our fuel trucks to the island utilizing military transport planes and ships. Sun Coast also has strong alliances with all of the refiners and terminal operators throughout the country, so we can source fuel supply from unaffected areas for resupply to the impact zones.” Sun Coast still has equipment and company personnel in Puerto Rico, committed to fueling hundreds of generators and other equipment until power to the grid is fully restored.

Sun Coast has been widely recognized by grateful communities for its myriad emergency response efforts over the years, and it has become a point of great pride within the organization. “We have been doing this for so many years,” Lehne says, “and it’s something that our employees are very proud of. It gives our drivers a chance to do something outside of the ordinary day-to-day assignments that they wouldn’t get at some other companies. Many of our drivers also tell me what a gratifying experience it is to be able to provide help to some of these devastated areas.”
So, hundreds of Sun Coast customers, thousands of Sun Coast employees and millions of residents and business owners in impacted communities have benefitted from Lehne’s entrepreneurial vision over the years.

If you’re looking for another class of people who have benefitted, you can start with children.

A Strong Focus on Providing Service to Children

When asked to discuss her company’s charitable efforts, Lehne’s voice glows. “Kids are a soft spot for me — they are our future, and anything that we can do to help them helps all of us in the long run.”

A perusal of the company’s web page detailing its charitable giving efforts reveals a very thoughtful and well-rounded program. Sun Coast is active with groups such as the Susan G. Komen Breast Cancer Foundation, The Rose (which provides breast cancer screenings and other services to less-privileged communities) and Texas EquuSearch, a group that returns missing persons to their families, to name a few. But what the page reveals more than anything else is a heavy focus on providing service to children.

The company is active with Rodeo Austin, which provides scholarships and other awards to young people. Also listed are the Junior Achievement organization, assisting youth in practical education including work readiness and financial literacy; and the Trinity Oaks organization, which provides all-expense-paid “dream trips” for terminally ill children.

Lehne becomes especially enthusiastic when talking about the DePelchin Children’s Center. Based in Houston, but with offices across the state of Texas, DePelchin is an accredited foster care and adoption agency that also provides a wide variety of services and programs for challenged and underprivileged kids, with an overarching goal of breaking the cycles of abuse and neglect.

“We have been very active in support of the DePelchin Children’s Center because it is the leading center in Texas for children’s well-being, with a focus on mental health, foster care and adoption services. One thing the DePelchin Center does is to go into schools in less privileged areas and help teach the kids things about entrepreneurship, the basics of business and how things work,” Lehne says, “I have personally taught the classes, and to see the kids eyes light up on something like that is very gratifying.”

Sun Coast also strongly supports the March of Dimes, a national charitable organization whose primary focus is preventing birth defects and infant mortality. This group plays a leading role in searching for genetic causes of birth defects, promoting newborn screening, and educating medical professionals and the public about best practices for a healthy pregnancy. The March of Dimes also supports research for surfactant therapy to treat respiratory distress and help initiate the system of regional neonatal intensive care for premature and sick babies.

So you can add kids — lots of kids — to the long list of people who have benefitted from Lehne’s decision to go into business for herself.

A One-Stop Energy Shop

You’ve seen accounts of many of the many people who have benefitted from the business that began with Kathy Lehne’s $2,000 of life savings — now, let’s explore the business itself. You’ve probably already deduced from what you’ve read thus far that Sun Coast is a transportation company, one that transports petroleum fuels from one place to another. That is all true.

Sun Coast is, in fact, one of the most diversified, wholesale petroleum distribution marketers in the nation. The company boasts a fleet of more than 700 fuel, lubricant and crude oil delivery trucks, which range in size from 1,000 gallons of capacity to over 8,000 gallons. Manning those trucks are more than 900 employee hazmat (hazardous materials) certified professional drivers, who operate 24 hours per day, 365 days each year, out of 18 office, warehouse and bulk plant facilities located near key demand centers.

In addition to its company headquarters in Houston, Sun Coast has 17 offices and bulk plant facilities in Texas, along with facilities in Broussard and Baton Rouge, Louisiana, and in Enid, Oklahoma. The company also recently purchased land to house a new facility just outside of Pecos, Texas, to help Sun Coast service the booming oil fields of the West Texas Permian Basin.
But the company’s operations are not limited to the three states in which it has permanent facilities. Due in large part to its emergency response operations, Sun Coast is licensed to operate in 39 states, as well as in Puerto Rico. It is, in other words, a big and growing business, and it is about much more than simply transportation of fuels.

Sun Coast offers a broad array of services to its customers, making it “a one-stop energy shop.” Included in these additional services are a robust tank loan program, automated tank monitoring, used oil pickup services, fuel and oil testing, filtration and purification services, a fully automated fuel management system and spill response.

Lehne is especially proud of the Sun Coast tank loan program. “It’s the most generous tank loan program in the industry,” she says. “We have around 7,000 of what we call skid tanks — portable tanks that we loan out to customers — and they range from 100 gallons to 20,000 gallons. We have a whole tank department that, when an order comes in, we coordinate the delivery and setting up of the tank for the customer’s use.

“Construction sites, rig sites, school districts and other industrial applications use these tanks during normal times. During emergencies, lots of people must have power supplied from portable generators, so they need a tank there to supply the fuel for those.”

Add another category to our list of people and businesses who have benefitted from the Kathy Lehne vision.

A Key Partnership is Formed

During its first 16 years as a company, Sun Coast had experienced steady growth, and by the end of 2000 had a staff of about 100 employees managing a fleet of around 50 trucks.

A major milestone in Sun Coast’s growth path came in 2001 when it became an official distributor for Chevron’s line of lubricants. From that point forward, the company’s growth path rapidly accelerated. By 2003, the company’s revenues, which first reached $300 million in 2001, had topped the $500 million mark. By 2005, Sun Coast’s truck fleet had doubled to more than 100.
Revenues topped the $1 billion mark in 2007, and the fleet had grown to more than 500 by the end of 2010. Sun Coast first topped the 1,000-employee level in 2011.

“We’ve enjoyed an outstanding business relationship with Chevron’s Lubricant Division,” Lehne says. “Our company has grown year after year with Chevron and is now one of their largest Signature, Elite Class Lubrication Marketers in the nation. Chevron’s commercial line of DELO lubricants is known for their unparalleled high-quality performance under the most severe operating conditions; and when coupled with the service provided by Sun Coast’s on-staff chemical engineers and certified lubricant specialists, customers can expect reliable equipment performance around the clock.”

A Focus on Oil and Gas Services

If you’ve ever witnessed a large-scale hydraulic fracturing job in the oil field, you know that it is a very loud operation and that most of the noise comes from dozens of engines on trucks and pumps that are forcing the frac fluid down the hole under high pressure. In a typical situation, each and every one of those truck and pump engines requires diesel fuel, and lots of it.

Providing diesel, gasoline and lubricants to oilfield equipment and installations is a heavy area of focus for Sun Coast, and it is getting busier all the time. This is especially true in Texas, where the rising price for crude oil has created a genuine boom in the Permian Basin of West Texas, as well as a growing number of active rigs and frac jobs all over the state. Oklahoma, with the attractive economics in the SCOOP/STACK play, has also seen a rising level of activity over the last year.

All of this activity in the oil patch has kept Sun Coast very busy and provided Lehne with an opportunity to further expand her workforce and operations. “We’ve had to hire more employees this year thanks to the growing oil boom,” she says. “We have been hiring drivers very steadily for more than a year now — it’s been especially hectic over the last six months. We’re also in the process of opening our new Pecos facility to serve the growth of the oil field out in West Texas.”

Everyone who wants to do business in and with the oil and gas industry ultimately experiences the ups and downs that come with the industry’s boom-and-bust cycles. In the last decade alone, the U.S. industry has experienced a bust in natural gas prices that has lingered for years, a massive boom in oil drilling fed by $100 oil prices, a huge bust in 2014 that saw the price for crude fall to as low as $26 a barrel, and now a new oil boom that has been largely focused in the Permian Basin but is now beginning to spread into other regions of the country.

Lehne founded her company in 1985, right in the midst of the terrible bust in oil prices that lasted throughout the rest of that decade. In its 33-year history, the company has persevered and steadily grown through at least five additional busts in either oil or gas prices. It’s enough to make most people’s heads swim.

But Lehne seemed unperturbed by it all. “You are correct about the boom and bust cycles we have experienced over the course of the past 33 years since I started Sun Coast,” she says, adding, “Quite simply, we make whatever changes are necessary during each period to best maintain profitable operations, while never compromising on customer service. Right-sizing a business is essential during any business cycle.”

For the time being, “right-sizing” Sun Coast means adding new facilities, new employees and new services to meet the needs of the company’s expanding customer base.

A Company Known for Treating its People Well

It’s probably not surprising at this point to learn that Sun Coast is known as a first-rate employer. In fact, the company has received so many honors and awards over the years that space limitations would prevent their listing here. In fact, the company and Lehne as an individual have received 13 such awards during 2017 alone. In addition to awards recognizing Sun Coast’s charitable giving programs and its emergency response contributions, Lehne is especially proud of having been named one of the Best and Brightest Companies to Work For in Houston multiple times, which she says “is a very significant thing.”

When we asked her to give us her thoughts on some of the reasons why Sun Coast continues to win that honor year after year, she did not hesitate: “We offer great benefits, flexible working hours, a variety of different positions within the company. We do a lot of promoting from within, and also a lot of cross-training. We have employees who started here as secretaries who are now in executive positions. That’s something we really focus on. I think our overall offering is very inviting to a lot of prospective employees.

“We have a heavy focus on service. We sell a commodity, and a lot of people can sell gasoline, diesel and lubricants, but it’s how you service your customers that makes the difference.
“It starts with our employees. We train our employees that the number one thing that we offer is customer service. This is a very competitive industry. So, we do whatever we can to ensure that the customer’s experience with Sun Coast is a great one.

“We’re a 24/7 company. We have drivers and dispatchers running around the clock. We cover a wide service area, and are licensed to do business in many states, so if a customer is buying from us here in Houston and says, Hey, we’re going to Arkansas tomorrow, we can go with them.”

“What doesn’t kill you makes you stronger.”

One might think that a young woman risking her whole life’s savings to start up her own business in the male-dominated world of oil and gas would have all sorts of stories to tell about intimidation, discrimination and a unique set of challenges that her male counterparts in the industry weren’t forced to overcome. But Lehne doesn’t remember things that way.

Oh, there were challenges, all right ― but she remembers facing mainly the kinds of tests faced by anyone engaged in a new business startup in a highly competitive industry.

“Where should I start? I faced countless challenges starting Sun Coast back in 1985 at the age of 23,” she begins. “I had so much to learn about every phase of jumping into the very competitive and shark-infested waters of wholesale fuel marketing and transportation. The old adage: ‘What doesn’t kill you, makes you stronger really is true.

“Some of the challenges I faced included securing adequate working capital financing, developing vendor relationships, hiring the right people for the right positions, working around the clock, obtaining enough credit from fuel suppliers for purchases, prospecting for new business, developing a marketing plan and setting sales goals, obtaining proper insurance coverage, leasing office space, setting up controls and back-office accounting systems, making sure Sun Coast was legally compliant with all Department of Transportation regulations and safety standards and making weekly payroll; the list goes on and on.

“Well, the experience did not kill me. It did, though, make me much stronger and better prepared for whatever came along, and provided me with the experience and tenacity I needed to be successful.”

Along the same lines, as Lehne has grown Sun Coast into one of the largest woman-owned businesses in Texas over the last 33 years, we wondered about the flip side of that coin — has she had any experiences in which being a woman in this industry has been an advantage to her? Again, the answer to the question is, for the most part, “not really”.

“Being a woman-owned business occasionally has had its advantages; however, for the most part, over 95 percent of our customer base deals with Sun Coast simply because we are a reputable marketer of high-quality petroleum products and services, and a supplier they can rely on, no matter what. I would say that there are a few organizations outside the petroleum distribution business who are curious about our success, and marvel about the amazing company Sun Coast has become with our vast asset base and diversified offering of products, programs and services.”
In other words, Lehne’s experience in the male-dominated world of oil and gas has been that she and her company have been judged, hired and competed with mainly on the basis of the quality of the products and services she has provided.

Interestingly, when we asked Lehne if she had any mentors who helped to guide her early on in her career, she credited a man she had worked with shortly after graduating from high school.

“Yes, early on I had a mentor who I had formerly worked for who was a great teacher and gave me a lot of confidence to be able to do the things we’re doing today,” she says. “My mentor inside the company was doing marketing at the time over in Houston, and I moved there to work with him. That was where I got into the telemarketing side of things and began to build up relationships and a customer base.” It was that experience that led her to venture into business for herself.
Having had a mentor of her own, we asked Lehne to tell us about the kinds of things she’s done to encourage opportunities for the next generation of young women to create their own careers in this challenging business. Not surprisingly, she’s had a wealth of such experience to share.

“I have always encouraged women to pursue their dreams. I’ve had the opportunity to meet with many of them who have asked for advice. Anyone who has the entrepreneurial urge to be their own boss, above and beyond anything else, should pursue their dreams. I advise them that they will have to work harder and longer than they think is humanly possible if they choose to start their own business or try to move up the corporate ladder; but with ironclad determination and passion, success can be realized.

“One thing I caution them about is not to listen to naysayers or negative thinkers. If those around us who have become successful had listened to them, we would not have the inventions we rely on today for our better way of life. The greater the reward, the greater the risk. That is what makes the free enterprise system work so well.” Bottom line, Kathy Lehne is not a “female CEO.” She’s a CEO, a boss, a leader who deserves to be judged based on the things she’s accomplished, the business she’s built and the services she has provided to so many others.

In the final analysis, Kathy Lehne’s career might best be described as a business-world example of what is known as the “Butterfly Effect.” The Butterfly Effect is a chaos theory–related phenomenon in which a minute localized change in a complex system — such as the flapping of a butterfly’s wings — can have vast effects elsewhere.

In Lehne’s case, the “minute change” was her decision to use her life’s savings of $2,000 and take the risk of starting her own business in the “complex system” of the oil and gas industry. Over the last 33 years, the large effects are exemplified by the millions of lives that have been positively impacted thanks to that flapping of the butterfly’s wings.

 

About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at david@shalemag.com.

 

Photos by Michael Giordano and courtesy of Sun Coast Resources

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