Mining Momentum

Meet Steve Harman, Shell Oil’s go-to man when a division needs to fuel growth. Harman grew up in Durham, a small mining village in the U.K. Raised in a coal-mining family, he left school and entered the pits at age 16. Two years later, Harman was back in class courtesy of a program run by the National Coal Board. A subsequent university scholarship to study geography and geology enabled him to leave coal mining-but not coal mines-behind.

“Because they pay for your education, you basically sign your life away,” he explains. “So I made a 10-year commitment to work with the Coal Board traveling all over the world and consulting on mining developments.”

Harman had bought out his contract and began working in sales when he was recruited by Shell in 1984. In the 24 years he’s been with the multinational oil and Gas Company, he’s run various divisions.

Most recently, however, his role has been start-up operations and growing and globalizing mature businesses. Harman ran Shell’s Marine Products business as CEO, then went on to help architect and lead the globalizations of Shell’s Liquefied Petroleum Gas, Marine and Lubricants businesses.

In January 2006, Shell tapped Harman to lead Houston, Tex.-based Shell Lubricants, Americas, a division that encompasses operations in 17 countries in North and South America. Were it a stand-alone operation, Shell’s global lubricants business would rank it among the Fortune 250, with the markets under Harman’s domain accounting for more than 50 percent of its revenues.

Harman’s mission? To leverage the company’s strong share of market and brand recognition in driving growth in a market that’s declining as consumers drive less and drive differently in response to rising oil prices.

“We spent a lot of time looking at what we call our €˜growth bets’-in other words, where we can provide more value than anybody else,” says Harman. The U.S. lubricants market, for example, is very fragmented, with hundreds of competitors vying for customer attention. Shell’s strengths included brand recognition of Pennzoil Quaker State, which it purchased in 2002; a significant sales and distribution network, and a sizable investment and research arm.

But those pluses come with a flip side. “One of the challenges of running a big company is you can drift toward being too internal, towards bureaucratic dinosaur-type stuff,” notes Harman, who introduced a “Sales First” program to combat that tendency. “It’s essentially a behavioral program to encourage leaders and staff to look for external opportunities for growth, to go out and get to know their top customers and top prospects personally.”

All too often, that’s the sort of thing companies pay lip service to but don’t actually carry out effectively, he points out. “When a [branch] knows the CEO is coming around, they clean their offices and make sure to visit a tame customer,” says Harman, who meets regularly with regional staffers for “sandwich” lunches and to tag along on customer calls. “I spend about 60 to 70 percent of my time in the field meeting with staff and customers. Building and maintaining these partnerships with distributors and customers is like a marriage. Sometimes you have to back up and just say, €˜How’s it going?'”

In addition to guiding Shell toward a more customer-focused culture, Harman is steering the company toward product innovations. Already, Shell’s fully synthetic motor oils have gained momentum, with Pennzoil Platinum the fastest growing product in that segment and Q HorsePower winning approval for use in Ferrari and Maserati vehicles. Shell also launched Rotella-T, a diesel fuel product, and its recently launched Rain-X wiper blades quickly became the company’s top brand in the car-care business. More innovations-including entries in the new energy and renewables arena-are under way, with time horizons ranging from two to 20 years out.

“We’re working on a whole range of technologies in the new energies and renewables space,” Harman notes. “A world less dependent on oil represents a whole suite of opportunities around new products.”

In the meantime, his early efforts have already born fruit. Under Harman’s tenure Shell Lubricants Americas strengthened its No. 1 position in the U.S. and achieved customer recognition from major customers, including a vendor of the year award from Tractor Supply and a Supplier of the Quarter award from Wal-Mart.

“We’ve won many good pieces of business over the last couple of years and external recognition,” says Harman. “I’m delighted with where we are, but I’m never complacent. I’m never relaxed. We’re on a journey and that’s got to be sustainable.”

INbox

U.S. Corporate Tax Rate Is Second Highest in OECD Ranking, 2000-2006

Only Japan taxes corporate income at a higher rate than the U.S. Germany had higher tax rates than the U.S. in 2000 but now has a lower rate (38.9 percent). Ireland has a 12.5 percent corporate rate, nearly the lowest in the world, and yet collects 3.6 percent of GDP in corporate revenues, well above the international average. The U.S., by contrast, with its near 39.3 percent rate, has been averaging less than 2.5 percent of GDP in corporate receipts.

Country

Corporate Tax Rate In 2000a(%)

Rank In 2000

Corporate Tax Rate In 2006a(%)

Rank In March 2006

Percentage Reduction In Corporate Rate (%) 

 Japan

40.9

4

39.5 

-3.3 

 United States b

39.3

7

30.3 

-0.1 

 Germany

52.0

38.9 

-25.2 

 Italy

41.3

37.3 

-9.7 

 Canada

44.6 

36.1 

-19.1 

 Spain

35.0

11

35.0 

6

 0.0

 France

37.8 

34.4 

-8.9 

 Belgium

40.2

34.0 

-15.4

 Newzealand

33.0 

16 

33.0

9

0.0

 Luxembourg

37.5

9

30.4

10

-18.9

 Australia

34.0

14

30.0

11

-11.8

 Turkey

33.0

16

30.0

12

-9.1

 United Kingdom

30.0

21

30.0

13

0.0

 Netherlands

35.0

11

29.6

14

-15.4

 Greece

40.0

6

29.0

15

-27.5

 Mexico

35.0

11

29.0

16

-17.1

 Denmark

32.0

18

28.0

17

-12.5

 Norway

28.0

26

28.0

18

0.0

 Sweden

28.0

26

28.0

19

0.0

 Korea

30.8

20

27.5

20

-10.7

 Portugal

35.2

10

27.5

21

-21.9

 Finland

29.0

24

26.0

22

-10.3

 Austria

34.0

14

25.0

23

-26.5

 Czech Republic

31.0

19

24.0

24

-22.6

 Switzerland

24.9

28

21.3

25

-14.5

 Poland

30.0

21

19.0

26

-36.7

 Slovak Republic

29.0

24

19.0

27

-34.5

 Iceland

30.0

21

18.0

28

-40.0

 Hungary

18.0

30

16.0

29

-11.1

 Ireland

24.0

29

12.5

30

-47.9

Unweighted OECD  Average

33.7

28.5

-15.5

Note: Small changes are usually attributable to changes in sub-national rates.

(a) Rates for 2000 and 2006 are combined central and sub-central tax rates. Where sub-central income tax is deductible against central government tax, this is reflected in the net rate of the central government.

(b) The sub-central tax rate for the U.S. is calculated as a weighted average of states’ top corporate income tax rates in 2000 and 2006, deductible in both years from federal taxable income.

(c) Includes regional business tax which is levied at a rate of 4.25 percent


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