A Clean Sweep

Alton Geoscience used to depend almost entirely on contracts with major oil companies to clean up underground tank leaks at gas stations. But when enforcement of state regulations weakened in early 1994, Alton’s business began to stall. By the time Bill Hunt took over last year, prices had fallen, contracts were on hold and revenue was flat. Over the last year, Hunt has aggressively cut overhead and diversified the company’s customer base in an effort to turn the business around.

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I joined the company in August 1985 as an environmental geologist. About 80% of our jobs came from the major oil companies. Then enforcement slacked off, and our customers began taking a wait-and-see posture on cleanup jobs.

At the same time, the underground tank cleanup industry had become saturated and our competition had increased. We realized too late that Alton had over-concentrated on the petroleum industry.

When I was promoted in April 1996, my chief financial officer, Brian Cullen, and I got aggressive. We knew the overhead was way out of whack and we would have to reduce it before we could turn a profit again.

Over six months, we reduced overhead by 24%. Out of a total $8-million budget, we cut $1.1 million.

All middle managers and above took 5% pay cuts. People went out the door, including good friends, and we lost good people to our competitors. Some went on reduced schedules if they had the luxury of going part time.

All the executive staff, including me, gave up company cars. We reduced our fleet from 44 vehicles to 28 field trucks, saving $100,000 annually.

We reduced our rent by 66% at our corporate office. We were paying premium dollars on a six-year lease, but we arranged a swap with our sub-tenant. They became master tenants, we became their sub-tenant and moved into 8,500 square feet. In that way, we saved $250,000 a year.

We also downsized our accounting and information systems, saving $70,000, reduced our corporate and liability insurance by $50,000 and closed a satellite office in Valencia and moved the white-collar staff based there to our Irvine office.

While we were cutting overhead, we also developed a new marketing strategy. We began diversifying beyond the major oil industry, focusing on private-sector industrial customers and municipal agencies. We have gone back to our roots as a construction firm and retooled our efforts in the underground tank replacement business.

Finally, we developed a transportable system for soil and ground-water treatment and put together a computer database that manages huge volumes of environmental quality compliance data for our clients.

When a company is in decline, it tends to adopt a defensive posture. Reacting to the latest challenges was preoccupying us. But in the last year, we’ve gone very much on the offense. I think Alton is a better managed company now than it’s ever been.

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AT A GLANCE

Company: Alton Geoscience Inc.

President/CEO: Bill Hunt

Nature of business: Environmental consulting and construction

Location: Irvine

Founded: 1981

Employees: 70

Annual revenue: $8 million