The family behind Waitomo petrol and the 'unmanned effect' on petrol prices

Saturday, 6 July 2019

Waitomo opened its first central Wellington petrol station on Hutt Rd on Tuesday.

The 'unmanned effect' is shrinking petrol prices, and a King Country fuel business is one of the drivers.

After creating queues when a site opened in Upper Hutt, no-frills fuel company Waitomo has moved into the Wellington suburb of Thorndon.

It opened on Tuesday, and by Friday the nearby Caltex on Old Hutt Rd had matched its $2.07 price for 91 fuel. Z Harbour City and BP Connect Roadmaster were at $2.20.

'There just weren't any other discount fuel operators operating [in the Wellington area], so I suppose the prices were quite a bit higher,' Waitomo managing director Jimmy Ormsby said.

**READ MORE:

Jimmy Ormsby is the third generation of his family to run the business.

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The 70-year-old Waikato company's arrival has definitely pulled down prices at nearby service stations, AA's expert on petrol prices Mark Stockdale said.

Low-cost fuel supplier Waitomo opened its first central Wellington fuel stop on Hutt Road, Thorndon, Tuesday morning.

'In Upper Hutt, the prices are uniformly lower now, with Waitomo leading the prices.'

It's like the Gull effect - named after an early market disrupter - but, now Waitomo is forcing similar drops, 'maybe it would be fairer to call it the unmanned effect.'

Petrol prices have been getting attention, with the government ordering an investigation in December 2018, and price watchers recently finding Waitomo had the lowest average price on all but a handful of days in 2019.

Waitomo has been run by Ormsbys for three generations; managing director Jimmy Ormsby is the grandson of founder Desmond Ormsby, who started things in Te Kūiti in 1947.

Even Wellingtonians not buying from Waitomo will benefit from the downwards pressure it puts on fuel prices, managing director Jimmy Ormsby says (file photo).

It's gone from King Country-only to more than 60 fuel stops from Paihia to Wellington.

The May Upper Hutt opening made it the only low-cost fuel provider in the capital, and nearby competitors have dropped prices in response.

'All the Wellingtonians have benefited,' Jimmy Ormsby said. 'Whether they're buying it off us or buying it off another fuel supplier, they will be paying less than before we entered the market.'

The company draws its fuel from Mobil, which allows it to move into new regions.

The company had a period of joint ownership with Mobil Oil New Zealand, but bought the company out when Mobil merged with Exxon.

Waitomo has a no-frills operation. Self-serve petrol stations without cafes, toilets, or staff in high-vis jackets help reduce overhead costs.

They need a profit margin to be sustainable, but price is an important value, Ormsby said.

'When we say 'this is the Waitomo price', then that is the best price we have on the day.'

Ormsby has heard the claims that low cost equals substandard petrol, but says its product meets all industry standards.

Waitomo is generally about 20 cents below the national price, AA's Mark Stockdale said, because of a different business model.

'They don't have a shop. They don't have a car wash. They don't employ staff at the outlet, and their sites are smaller,' he said.

Desmond Ormsby founded Waitomo Fuel in 1947, in Te Kūiti.

They're selling the same product as the big companies, they just have lower overheads, which translate to lower pump prices.

Waitomo's initial expansion started when deregulation opened up the oil industry in the late 80s and Jimmy's father Grey Ormsby joined the business.

Jimmy Ormsby's daughters Kiri, 11 (left), and Isla, 12, have already been introduced to the Waitomo Fuel business.

There was a period of joint ownership with Mobil Oil New Zealand.

The company made the decision to become part of something bigger, and moved its headquarters to Ellis St, Hamilton - where the office remains today.

The Ormsbys kept a share in the business through one merger, and it paid off in 2003. Mobil merged with oil giant Exxon, which didn't want a joint venture with a small family business in New Zealand.

'Mobil said to us, what would you like to do? Sell out and exit the business altogether? Or would you like to buy us out and take full equity?'

They opted for the latter after Grey Ormsby talked son Jimmy Ormsby into returning from his OE in London to help with the family business.

The relationship with Mobil helped Waitomoset up a contract for competitively priced fuel for its customers.

Waitomo founder Desmond died in 2001, while Grey, 79, stepped down from the company this year. But Jimmy Ormsby still has plenty of plans including opening another five fuel stops this year, including one in Christchurch, their first in the South Island. That would make 10 new fuel stops in 2019.

And Ormsby has already started introducing his two daughters Isla, 12, and Kiri, 11, to the business.

'I had the opportunity and I grasped it with both hands and ran with it with the support of my dad. If the timing is right at a similar age and it makes sense, they will get the same opportunity and whether they run with it or not that is their choice.'