 A Time of Change
Harry F.
Sinclair passed management responsibility to the
new generation in January 1949 -- when he receded to the perimeter as chairman of
the board. In his own fashion Mr. Sinclair
trained this new generation so that they knew
what had to be done with his legacy.
Decentralized Management Doubles Sales and
Assets
The first necessity was to create a diversified
management. The major
 operations were broken
into separate companies, decentralizing
initiative and vesting
operating authority in each subsidiary. Inspired
by their independence, these colleagues bloomed
creatively.
 Another urgency
was the need to secure Sinclair's share of the
huge consumer buying which followed World War
II. Annual national
gasoline production jumped 77.1 percent and
household fuel use 109.3 percent in a decade.
Merely to hold its pre-war percentage of the
petroleum products market, Sinclair was forced
to expand its refining capacity.
 A crash program
increased refinery throughput 60 percent. This
in turn motivated equivalent jumps in pipeline,
storage and tanker capacities, plus hundreds of
new marketing locations.
The expansion
caused both gross sales and gross assets to
double. But the old weakness -- not enough crude
oil -- was not alleviated. At the end of 1956
Sinclair still bought, in an inflationary
market, six of every ten barrels of crude oil it
used. The competitive disadvantage was offset
somewhat by the high sales volume and by
efficiency. The reorganized pipeline system had
the industry's lowest ratio of expense to
revenue; the waterborne fleet was as economical
as any. The refineries achieved a utilization
 of
95 percent
of capacity.
The capital
expansion cost $1,607,000,000 in twelve years.
Of this, 88.5 percent was financed from cash
income (net earnings, depreciation, depletion,
etc). Thus the debt structure, though
formidable, was placed on a firmer base than
ever before.
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