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Giant Industries, Inc.

Giant Industries, Inc.

23733 North Scottsdale Road
Scottsdale, Arizona 85255-3410
U.S.A.
Telephone: (480) 585-8888
Toll Free: (800) 937-4937
Fax: (480) 585-8948
Web site: http://www.giant.com

Public Company
Incorporated: 1969
Employees: 2,465
Sales: $1.29 billion (2002)
Stock Exchanges: New York
Ticker Symbol: GI
NAIC: 324110 Petroleum Refineries; 422710 Petroleum Bulk Stations and Terminals; 422720 Petroleum and Petroleum Products Wholesalers (Except Bulk Stations and Terminals); 447110 Gasoline Stations with Convenience Stores; 454311 Heating Oil Dealers; 454319 Other Fuel Dealers

Giant Industries, Inc. is a refiner and marketer of petroleum products based in Scottsdale, Arizona. Most of the company's operations are in the southwestern portion of the United States, centering on the Four Corners areawhere Utah, Colorado, New Mexico, and Arizona converge. These include two crude oil refineries located in New Mexico, near Gallup and Farmington; a crude oil gathering operation based in Farmington with approximately 239 miles of pipeline; two distribution terminals for finished petroleum products in Flagstaff, Arizona, and Albuquerque, New Mexico; a transportation company with 32 trucks that carry crude and finished petroleum products to its own service stations in the Four Corners area; and 127 service stations that include either convenience stores or kiosks, which are located in New Mexico, Arizona, and Colorado. The vast majority of the service stations are branded under one of three names: Giant, Mustang, or Conocothe former two are company-owned monikers, while the latter is used under a licensing agreement with oil giant ConocoPhillips. In addition, Giant owns Phoenix Fuel Co., Inc., an industrial/commercial wholesale distributor of petroleum products, including diesel fuel, gasoline, jet fuel, kerosene, and motor oil; Phoenix Fuel is primarily active in Arizona but also serves customers in Nevada, New Mexico, and Texas. During 2002 Giant Industries gained a foothold on the East Coastand more than doubled its refinery capacitythrough the acquisition of a crude oil refinery in Yorktown, Virginia, from BP p.l.c.

Early History

The founder of Giant Industries, Inc. has become one of the living legends in the Southwest. James E. Acridge started his rise to prominence in 1961 when, at the tender age of 21, he leased a small gasoline station in Glendale, Arizona, from Richfield Oil (later to change its name to Atlantic Richfield). Four years later, the ambitious young man leased another station in the southern part of Phoenix, Arizona. This time he operated it under his own sign, Giant, while still holding onto his first station in Glendale. The new station was a much larger, three-island, nine-pump gas station, supplied by Shell Oil Company. Within one year, Acridge had his new Giant gas station pumping more than 60,000 gallons per month. When the owner of the property on which his Giant station was situated demanded 1.5 cents per gallon instead of a flat rent fee, Acridge moved into another station where he put up his Giant shingle and was soon pumping 50,000 gallons per month.

It was not until 1968, however, that Acridge jumped into the big league of gas station operators. He purchased a small twoisland station, an old Signal Oil gas station in Phoenix, and put up the first self-serve sign in the region. Almost overnight the volume jumped to 150,000 gallons per month. The next step was a natural one. Acridge purchased a plot of land near Mesa, Arizona, borrowed $30,000 from a bank to begin operations, leased all the necessary equipment, and built his own multipump gas station. This station was pumping 150,000 gallons of gas by its third month in operation. Acridge incorporated his company in 1969, and from that time on he was the undisputed king of self-serve gas stations in Arizona.

Expansion and Growth in the 1970s

Fully aware that he was 15 years ahead of the market, Acridge built his second self-serve unit in 1970. The design of this unit was the forerunner of all subsequent self-serve gas stations. Under the world's largest gas station canopy up to that time, Acridge wanted to make it a pleasant experience for his customers to pump gas, so he piped in soft, soothing music under the canopies, constructed high retaining walls so that people would not be embarrassed if their friends saw them at a self-service station, and provided ample space between all the gas pumps for customers to pump their own gas without any significant delay. Within a short time, the two self-serve stations were pumping between 250,000 and 300,000 gallons of gas per month. By 1973, Giant Industries had expanded to include 12 self-serve gas stations and was pumping more than one million gallons of gasoline per month.

Acridge was confident that the full service gas stations were not able to compete with his innovative units. Soon major oil companies began to court the rapidly growing company, and Acridge decided to switch from his traditional independent supply sources to Phillips Petroleum Company. But almost as soon as the ink had dried on the contract, Phillips informed Acridge that the company was pulling out of the Phoenix market and cutting off Giant's supply of gasoline. When Acridge discovered that most independents like Giant had been cut off by the larger oil companies, he went into federal court and procured an injunction requiring Phillips to continue supplying his company. After a meeting of more than 60 independents in Phoenix, the group devised a strategy to lobby Washington and the Federal Energy Office to enact new rules that would allow for a more equitable sharing of oil supplies. Before the regulation went into effect, however, Giant was forced to close all but four of its gas stations.

When the oil embargo by OPEC exacerbated an already existing supply crisis, Acridge decided to enter into the refinery business to ensure a steady supply for his own stations. He purchased a small gas processing facility located in Carthage, Texas, had it completely dismantled, and transported the entire plant to Farmington, New Mexico, where it was reassembled and put in working order. As the worry about supply subsided, Acridge focused on reopening his closed units and constructing new ones. As his operation grew, he also decided to develop tie-in businesses that augmented his self-serve stations. His first idea involved what he called a "C-Store," a huge store situated in back of his gas stations that sold a large line of groceries, including such items as sporting goods and automotive parts, and included an on-site dry cleaners. The customers did not come, sales were almost nonexistent, and Acridge was forced to close the stores within a few months. Other misguided tie-in developments included a tire business and a fast food restaurant called "Fast Eddie's."

One of the tie-in businesses that did work was a scaled-down version of the C-Store concept, which Acridge named Giant's "Goodies C-Store." Designed as a small kiosk of approximately 1,000 square feet, situated in the middle of a gas station between the pump islands, it allowed customers to pay at a window for their gas or to enter the store and purchase an item. The stores carried about 400 to 450 products, mostly such things as cigarettes, beer, soft drinks, pre-made sandwiches, snacks, candies, and picnic-type supplies. The per-store average sales figure quickly climbed to $10,000 per month, and some were even averaging sales as high as $25,000 per month. With this income, Acridge was able to reopen most of his stores that were forced to close during the early 1970s. By the end of 1979, Giant was operating 23 gas stations and pumping more than four million gallons of gasoline per month.

Consolidation and Profitability During the 1980s

The 1980s were years of dramatic change for the company. In 1981 the major oil companies initiated a strategic campaign to squeeze out independent gas station entrepreneurs such as Acridge and reestablish themselves in markets from which they had long been absent. During the middle and late 1970s, independents had captured 55 percent of the gas station market in Phoenix. But after companies such as Shell and Texaco increased their presence, most independents were soon pushed out of the market. Giant, however, was one of the few that remained, and at some cost. Acridge was forced to scale back his operations dramatically, and he closed all of his stations in the Phoenix metropolitan area. Branching out into smaller towns, Giant found a more stable, and lucrative, market.

In 1982 Giant acquired the Ciniza refinery from Shell, a more sophisticated and modern facility, and closed down the refinery it had built in Farmington, New Mexico. Acridge decided to close the New Mexico refining operation because the regional demand for residual fuel began to subside. At Ciniza, located near Gallup, New Mexico, Giant added a $12 million, state-of-the-art 5,000 barrels-per-day (b/d) isomerization unit to enhance the facility's ability to produce unleaded gasoline. By the mid-1980s, Ciniza was producing approximately 25,000 barrels per day and supplying motor fuels to more than 100 different customers throughout Arizona and New Mexico. Almost 25 percent of the company's annual production was sold through its own retail outlets, service stations, and two super retail centers.

Heartened by the success of his Goodies C-Stores during the early and mid-1980s, Acridge decided to open what became known as a "highway extravaganza," an enormous combination truck stop/gas station/retail store close to the Ciniza refinery, about 20 miles east of Gallup, New Mexico, on Interstate 40. Opened in 1987 and covering about 35 acres of property, the Giant Travel Center complex included a Truck Center; a fueling center for truckers with its own C-Store; a travelers' fueling center for passenger cars and recreational vehicles, separate from the Truck Center; and a 29,000-square-foot shopping mall with six retail stores, a restaurant, and a movie theater.

Company Perspectives:

Core Values. Do your best. Do what's right. Treat others the way you would like to be treated.

The first one of its kind, the Giant Travel Center went against one of the principles upon which Acridge built his independent business. The Truck Center itself had 18 fully attended pumping islands that provided diesel fuelat selfserve prices, of course. The decision to have attendants was based on the fact that Giant had to get certain information from truckers who paid their fuel bills with credit cards or vouchers. The Truck Center also included a service center, where truckers could have repairs done by a staff of certified mechanics and service technicians. Oil changes, grease jobs, and tire replacements were the most common types of maintenance required by truckers, and Giant began to garner a reputation for its efficiency and competence. In addition, the service center had the only truck wash between Barstow, California, and Oklahoma City, Oklahoma, and, as word of the facilities at the Travel Center spread, truckers would sometimes drive 350 miles out of their way just to get their rig washed.

Although tourists and local customers were always welcomed at the Giant Travel Center, it was the intention of Acridge to cater to and treat the truckers as if they were royalty. Truckers were spending an average of between $100 to $150 on fuel alone, not to mention all the other purchases they made at the retail stores and restaurant. So Acridge arranged for a van to carry truckers back and forth from their rigs in the vast parking lot of the Travel Center, built 26 shower stalls of hotel-like quality for truckers who wanted to clean up between rides, installed laundry facilities, and a shoe shine. Perhaps most important of all, a trucker could order a 16-ounce T-bone steak for $10.95, have it cooked to order, and call home from the telephone situated on his table. As business boomed and more truckers began to arrive at the Travel Center, Acridge expanded his operation to include more retail stores and a new restaurant whose staff included a head chef trained at the highly respected Culinary Institute of America.

Acridge took Giant Industries public in 1989 with a listing on the New York Stock Exchange. That year also saw the company enter the oil and gas exploration business through the acquisition of Hixon Development Co., which was renamed Giant Exploration & Production Co. Giant also constructed a new headquarters building in Scottsdale.

Acquisition-Fueled Growth in the 1990s

During the early 1990s, Giant Industries continued its rapid growth. In 1993 the Travel Center alone reported that it pumped more than 20 million gallons of fuel. Over the years, the company had built up its transportation operation to include a fleet of 90 trucks that carried crude and finished petroleum products not only to its own facilities but also to a growing number of customers in the Four Corners region. In 1995 Acridge made another investment by acquiring a crude oil gathering operation located in San Juan County (where Farmington was located) that included approximately 340 miles of pipeline.

Key Dates:

1961:
James E. Acridge leases a small gasoline station in Glendale, Arizona, from Richfield Oil.
1965:
Acridge leases a second station in Phoenix, operating it under his own brand, Giant.
1969:
Acridge builds his own multipump self-serve gas station near Mesa, Arizona; he incorporates his company as Giant Industries, Inc.
197374:
A supply squeezeengendered both by larger oil companies and the OPEC oil embargoforces Giant to close all but four of its gas stations; company soon responds by building its own refinery in Farmington, New Mexico, using equipment purchased from a Texas gas processing facility; Giant begins reopening closed gas stations and opening new ones, some of which start to feature kiosks.
1979:
Giant is operating 23 gas stations, pumping more than four million gallons of gas per month.
Early 1980s:
Competition from the oil majors forces Acridge to close all his stations in the Phoenix metro area and to shift the focus of his retail operations to smaller towns.
1982:
Company acquires the Ciniza refinery, located near Gallup, New Mexico, from Shell; the Farmington refinery is shut down.
1987:
The Giant Travel Center, an enormous combination truck stop/gas station/retail store, is opened on Interstate 40 near Gallup.
1989:
Company goes public with a listing on the New York Stock Exchange.
1995:
Giant acquires a crude oil gathering operation based in Farmington that includes about 340 miles of pipeline.
1996:
Company acquires its second refinery, located in Bloomfield, New Mexico.
1997:
Giant acquires 96 service stations in Arizona, New Mexico, Colorado, and Utah from Thriftway Marketing Corp.; wholesale distributor Phoenix Fuel Co., Inc. is acquired; Giant enters into an alliance that enables it to begin using the Conoco brand on some of its service stations.
1998:
About 50 of Giant's service stations adopt a new company-owned name, Mustang; Giant agrees to a merger with Holly Corporation, operator of refineries in New Mexico and Montana, but the deal falls apart later in the year.
2002:
Acridge is ousted from his position as CEO and president; Giant acquires a refinery in Yorktown, Virginia, from BP p.l.c. for about $195 million.
2003:
The Giant Travel Center is sold to Pilot Travel Centers LLC.

By 1996, Giant Industries was one of the most successful petroleum products companies in the southwestern part of the United States. Having found its niche in the Four Corners area, the company increased its revenues from $301 million in 1992 to $499 million by the end of fiscal 1996. Giant Industries purchased its second refinery in 1996, located in Bloomfield, New Mexico, from the Gary-Williams Energy Corporation, for $55 million. This acquisition helped the company to consolidate some of its refining operations, lower transportation costs, and improve production. With the Ciniza and Bloomfield refineries working at full capacity, the company increased the number of barrels sold per day from 27,000 to 39,000 in less than one year. Because of the growing demand for more of its products, Giant decided to initiate a capital project to increase the number of barrels produced per day at both the Ciniza and Bloomfield refineries.

Also during 1996, Giant made a major purchase involving Diamond Shamrock, Inc. For $5.4 million the company acquired seven gasoline stations operated by Shamrock in northwestern New Mexico. This acquisition brought the total number of Giant-run gas stations to 56, largest of all the independents in the Four Corners region. The company also built two new combination service stations/convenience stores in Albuquerque, New Mexico; and Sedona, Arizona, and initiated a major campaign to remodel 28 of its existing service stations/convenience stores. There was also a significant divestment completed in 1996: Giant sold nearly all of its oil and gas exploration and production assets for $25.5 million.

Growth remained high on Giant's agenda in 1997. The company's refineries had excess capacity, and Giant attempted to remedy this situation through a large expansion of its retailing operations. In May 1997 Giant acquired, through a mix of buying and leasing, 96 service stations and convenience stores in Arizona, New Mexico, Colorado, and Utah from Thriftway Marketing Corp. Giant also acquired 22 truck transports as part of this deal. Later in 1997 the company acquired Ever-Ready Oil Co., an Albuquerque-based wholesaler and retailer that owned and operated 27 retail outlets, most of which were located in the Albuquerque area. Meanwhile, in June 1997, the company further diversified and secured another outlet for the products from its refineries by acquiring Phoenix Fuel Co., Inc. for $30 million in cash. Phoenix, an industrial/commercial distributor of petroleum products, had fuel sales of about 16,000 b/d.

The next year began with the acquisition of DeGuelle Oil Company, owner of seven Conoco brand gasoline stations in southwestern Colorado. The stations remained Conoco outlets under Giant ownership as Giant and Conoco had entered into a branding alliance in 1997 whereby Giant would begin using the oil giant's name at some of its stations. By the end of 1998, 49 of Giant's outlets, along with the Giant Travel Center, began sporting the Conoco name. Also during 1998, around 50 of the company's service stations adopted a new, company-owned name, Mustang. Giant acquired another 32 Arizona service stations from Kaibab Industries Inc., most of which were located in the Phoenix and Tucson areas. This deal brought the company's retail outlet count to 170.

In April 1998 Giant Industries agreed to a $350 million merger with Holly Corporation, a Dallas-based firm with refineries in southern New Mexico and Montana. But the two companies called off the merger in September of that year, apparently for two main reasons: a $1 billion lawsuit that was brought against Holly in late August and conditions on the merger that were demanded by the Federal Trade Commission, which was particularly concerned about the merger's impact on competition in the Four Corners area. For Giant, 1998 ended on a sour note as well: The company reported a net loss of $2.2 million (on revenues of $642.5 million) because of falling crude oil and finished product prices.

The company returned to profitability in 1999, a year in which Giant also built a new gasoline and diesel fuel terminal near Flagstaff, Arizona, with a capacity of 78,000 b/d. Giant also announced plans that year to sell about 25 of its service station/convenience stores in eastern Arizona, southern Colorado, and northern Arizona that were seen as noncore operations.

Adding a Third Refinery in the Early 2000s

Production of crude oil in the Four Corners region began declining in 1997, making it difficult for Giant to operate its two refineries at full capacity in a cost-efficient manner. The company therefore began seeking to acquire one or more refineries outside of its core area of operation. The abandoned merger with Holly was part of this effort, as were two other deals that failed to materialize in 2001. A joint venture with Western Refining to run a Chevron refinery in El Paso and one other refinery collapsed, and Giant also unsuccessfully bid for a refinery in Mandan, North Dakota, owned by BP p.l.c. Giant finally achieved its goal in May 2002 when it acquired another BP refinery, this one located in Yorktown, Virginia, for about $195 million. The refinery, the only one in Virginia, had crude oil capacity of 62,000 b/d, more than doubling Giant's total refining capacity.

Ironically, Acridge, the person who had guided Giant Industries since its founding, was ousted from his position as CEO and president in March 2002, before the Yorktown deal closed. The firing was evidently related to a $5.4 million insider loan to Acridge, which the company wrote down during the fourth quarter of 2001. Acridge remained on the board of directors but was replaced as chairman by Fred L. Holliger, who was named CEO as well. Holliger had previously served as chief operating officer.

Giant substantially increased its debt load in order to complete the Yorktown refinery purchase. Its long-term debt jumped from $256.7 million at the end of 2001 to $398.1 million one year later. The increased burden in servicing this debt contributed to the company's $9.3 million net loss for 2002, while revenues that year increased 35 percent, reaching $1.29 billion, as a direct result of the addition of the Yorktown facility. Giant embarked on a program of debt reduction that chiefly involved the divestment of noncore retailing assets. Eleven service stations were sold off during 2002, and by late 2003 the station count was down to 127. The company was particularly concentrating on selling off money-losing outlets in the Phoenix and Tucson areas. In addition, Giant sold its Travel Center near Gallup to Pilot Travel Centers LLC for $6.3 million in June 2003; sold its corporate headquarters building in Scottsdale, leasing back a portion of the building; and sold about 132 miles of its Farmington-based pipeline system. Through these and other moves, Giant Industries reduced its debt by about $83 million by late 2003. The company was committed to further trimming its debt load, thereby enhancing its profitability and placing it in position to seek further avenues of growth.

Principal Subsidiaries

Giant Industries Arizona, Inc.; Giant Four Corners, Inc.; Giant Mid-Continent, Inc.; Phoenix Fuel Co., Inc.; DeGuelle Oil Company; Ciniza Production Company; Giant Stop-N-Go of New Mexico, Inc.; San Juan Refining Company; Giant Pipeline Company; Giant Yorktown, Inc.; Giant Yorktown Holding Company.

Principal Competitors

Exxon Mobil Corporation; ConocoPhillips; Valero Energy Corporation; Tesoro Petroleum Corporation; Marathon Ashland Petroleum LLC; Holly Corporation.

Further Reading

Barrett, William P., "The Mother of All Truck Stops," Forbes, April 12, 1993, pp. 11618.

Byrne, Harlan S., "Giant Industries," Barron's, May 13, 1991, pp. 3132.

"CEO of Giant Ousted, Move Said to Be Linked to Personal Loan," Oil Express, April 8, 2002, p. 5.

Emond, Mark, "Giant Expands in Its Primary Market," National Petroleum News, June 1997, p. 21.

, "Giant Industries Expands in Far Southwest," National Petroleum News, October 1995, p. 28.

Evans, Beth, "U.S. Refiners Giant, Holly Merge to Create Niche Player," Platt's Oilgram News, April 16, 1998, p. 1.

"Giant Buys Seven Stations," Oil Daily, June 3, 1996, p. SW2.

"Giant's Profits Grow with Refining Sector," Oil Daily, May 14, 1996, p. 4.

"Giant to Sell Retail Assets, Postpone Refinery Upgrade, to Boost Bleak Bottom Line," Oil Express, August 12, 2002, p. 7.

Kiernan, Peter, "Tiny Giant More Than Doubles with Purchase of BP's Yorktown Refinery," Oil Daily, February 13, 2002.

Kovski, Alan, "Giant to Buy, Lease 96 Thriftway Outlets," Oil Daily, April 24, 1997.

, "Plant Purchases Help Giant Increase Profits," Oil Daily, March 5, 1996, p. 3.

Luebke, Cathy, "Giant Industries Inc. Files for Initial Public Offering," Business Journal of Phoenix, October 23, 1989, pp. 1+.

"Mapco, Giant Industries Beat Segment Trend," Oil Daily, October 31, 1996, p. 2.

McDonald, Michele, "Think Big: Giant Shops for Refinery," Scottsdale (Ariz.) Progress, June 7, 1994, p. 5.

Murphy, Marvin, "Phoenix-Based Giant Industries Details Major Expansion Program," Oil Daily, August 2, 1990, p. 5.

Norman, James, "Giant Branches Out, Buying BP Refinery," Platt's Oilgram News, February 13, 2002, p. 3.

Reid, Marvin, "Flying High in Tough but Tempting Phoenix," National Petroleum News, September 1980, pp. 6066.

Share, Jeff, "Successful Southwest Refiner Faces New Competition from Diamond Shamrock," Oil Daily, April 7, 1994, pp. 2+.

Tyson, Ray, "Merger of U.S. Refiners Giant, Holly Falls Apart," Platt's Oilgram News, September 3, 1998, p. 1.

Vandeveire, Mary, "Arizona Market Ripe for Giant Expansion," Business Journal of Phoenix, October 20, 1997.

Victoria, Frank, "How Giant's "Travel Center' Shatters Old Truck Stop Image," National Petroleum News, March 1988, pp. 3238.

Thomas Derdak

update: David E. Salamie

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Giant Industries, Inc.

Giant Industries, Inc.

23733 Scottsdale Road
Scottsdale, Arizona 85255
U.S.A.
(602) 585-8888
Fax: (602) 585-8893

Public Company
Incorporated:
1969
Employees: 1,386
Sales: $499 million (1996)
Stock Exchanges: New York
SICs: 2911 Petroleum Refining; 5541 Gasoline Service Stations

Giant Industries, Inc. is one of the fastest growing independent petroleum companies located in the southwestern portion of the United States. Operating in the Four Corners area, where Utah, Colorado, New Mexico, and Arizona converge, the company is involved in a wide range of refining and marketing activities, including two oil refineries at Gallup, New Mexico and Bloomfield, New Mexico; a crude oil gathering operation with approximately 340 miles of pipeline; a transportation company with 90 trucks that carry crude and finished petroleum products to its own service stations in the Four Corners area; 56 retail convenience stores/service stations in Arizona, Colorado, and New Mexico; and one of the most impressive, state-of-the-art Travel Centers located near Gallup, New Mexico. Headquartered in Scottsdale, Arizona, the company prides itself on being one of the leading minority employers in the Southwest, with more than 400 Native Americans working in various capacities throughout its facilities in the Four Corners region.

Early History

The founder of Giant Industries, Inc. has become one of the living legends in the Southwest. James E. Acridge started his rise to prominence in 1961 when, at the tender age of 21, he leased a small gasoline station in Glendale, Arizona from Richfield Oil (later to change its name to Atlantic Richfield). Four years later, the ambitious young man leased another station in the southern part of Phoenix, Arizona. This time he operated it under his own sign, Giant, while still holding onto his first station in Glendale. The new station was a much larger, three-island, nine-pump gas station, supplied by Shell Oil Company. Within one year, Acridge had his new Giant gas station pumping more than 60,000 gallons per month. When the owner of the property on which his Giant station was situated demanded 1.5 cents per gallon instead of a flat rent fee, Acridge moved into another station where he put up his Giant shingle and was soon pumping 50,000 gallons per month.

It was not until 1968, however, that Acridge jumped into the big league of gas station operators. He purchased a small two-island station, an old Signal Oil gas station in Phoenix, and put up the first self-serve sign in the region. Almost overnight the volume jumped to 150,000 gallons per month. The next step was a natural one. Acridge purchased a plot of land near Mesa, Arizona, borrowed $30,000 from a bank to begin operations, leased all the necessary equipment, and built his own multipump gas station. This station was pumping 150,000 gallons of gas by its third month in operation. Acridge incorporated his company in 1969, and from that time on he was the undisputed king of self-serve gas stations in Arizona.

Expansion and Growth in the 1970s

Fully aware that he was 15 years ahead of the market, Acridge built his second self-serve unit in 1970. The design of this unit was the forerunner of all subsequent self-serve gas stations. Under the worlds largest gas station canopy up to that time, Acridge wanted to make it a pleasant experience for his customers to pump gas, so he piped in soft, soothing music under the canopies, constructed high retaining walls so that people would not be embarrassed if their friends saw them at a self-service station, and provided ample space between all the gas pumps for customers to pump their own gas without any significant delay. Within a short time, the two self-serve stations were pumping between 250,000 and 300,000 gallons of gas per month. By 1973, Giant Industries had expanded to include 12 self-serve gas stations and was pumping more than one million gallons of gasoline per month.

Acridge was confident that the full service gas stations were not able to compete with his innovative units. Soon major oil companies began to court the rapidly growing company, and Acridge decided to switch from his traditional independent supply sources to Phillips Petroleum. But almost as soon as the ink had dried on the contract, Phillips informed Acridge that the company was pulling out of the Phoenix market and cutting off Giants supply of gasoline. When Acridge discovered that most independents like Giant had been cut off by the larger oil companies, he went into federal court and procured an injunction requiring Phillips to continue supplying his company. After a meeting of more than 60 independents in Phoenix, the group devised a strategy to lobby Washington and the Federal Energy Office to enact new rules that would allow for a more equitable sharing of oil supplies. Before the regulation went into effect, however, Giant was forced to close all but four of its gas stations.

When the oil embargo by OPEC exacerbated an already existing supply crisis, Acridge decided to enter into the refinery business to ensure a steady supply for his own stations. He purchased a small gas processing facility located in Carthage, Texas, had it completely dismantled, and transported the entire plant to Farmington, New Mexico, where it was reassembled and put in working order. As the worry about supply subsided, Acridge focused on reopening his closed units and constructing new ones. As his operation grew, he also decided to develop tie-in businesses that augmented his self-serve stations. His first idea involved what he called a C-Store, a huge store situated in back of his gas stations that sold a large line of groceries, including such items as sporting goods and automotive parts, and included an on-site dry cleaners. The customers did not come, sales were almost nonexistent, and Acridge was forced to close the stores within a few months. Other misguided tie-in developments included a tire business and a fast food restaurant called Fast Eddies.

One of the tie-in businesses that did work was a scaled-down version of the C-Store concept, which Acridge named Giants Goodies C-Store. Designed as a small kiosk of approximately 1,000 square feet, situated in the middle of a gas station between the pump islands, it allowed customers to pay at a window for their gas or to enter the store and purchase an item. The stores carried about 400 to 450 products, mostly such things as cigarettes, beer, soft drinks, pre-made sandwiches, snacks, candies, and picnic-type supplies. The per-store average sales figure quickly climbed to $10,000 per month, and some were even averaging sales as high as $25,000 per month. With this income, Acridge was able to reopen most of his stores that were forced to close during the early 1970s. By the end of 1979, Giant was operating 23 gas stations and pumping more than four million gallons of gasoline per month.

Consolidation and Profitability During the 1980s

The 1980s were years of dramatic change for the company. In 1981, the major oil companies initiated a strategic campaign to squeeze out the independent gas station entrepreneurs like Acridge and re-establish themselves in markets from which they had long been absent. During the middle and late 1970s, independents had captured 55 percent of the gas station market in Phoenix. But after companies like Shell and Texaco increased their presence, most independents were soon pushed out of the market. Giant, however, was one of the few that remained, and at some cost. Acridge was forced to scale back his operations dramatically, and he closed all of his stations in the Phoenix metropolitan area. Branching out into smaller towns, Giant found a more stable, and lucrative, market.

In 1982, Giant acquired the Ciniza refinery from Shell, a more sophisticated and modern facility, and closed down the refinery it had built in Farmington, New Mexico. Acridge decided to close the New Mexico refining operation since the regional demand for residual fuel began to subside. At Ciniza, Giant added a $12 million, state-of-the-art 5,000 b/d isomerization unit to enhance the facilitys ability to produce unleaded gasoline. By the mid-1980s, Ciniza was producing approximately 25,000 barrels per day and supplying motor fuels to more than 100 different customers throughout Arizona and New Mexico. Almost 25 percent of the companys annual production was sold through its own retail outlets, service stations, and two super retail centers.

Heartened by the success of his Goodies C-Stores during the early and mid-1980s, Acridge decided to open what has become known as a highway extravaganza, an enormous combination truck stop/gas station/retail store close to the Ciniza refinery, about 20 miles west of Gallup, New Mexico. Opened in 1988 and covering about 35 acres of property, the Travel Center complex included a Truck Center; a fueling center for truckers with its own C-Store; a travelers fueling center for passenger cars and recreational vehicles, separate from the Truck Center; and a 29,000-square-foot shopping mall with six retail stores, a restaurant, and a movie theatre.

Company Perspectives:

We at Giant Industries, Inc. are committed to six core values: unmatched excellence in customer service; responsive and supportive leadership; flexible, innovative and dedicated employees; honest and ethical behavior; wise and productive use of all resources; safety in all we do.

The first and, many truckers say, still the only one of its kind, the Travel Center went against one of the principles upon which Acridge built his independent business. The Truck Center itself had 18 fully attended pumping islands that provided diesel fuelat self-serve prices, of course. The decision to have attendants was based on the fact that Giant had to get certain information from truckers who paid their fuel bills with credit cards or vouchers. The Truck Center also included a service center, where truckers could have repairs done by a staff of certified mechanics and service technicians. Oil changes, grease jobs, and tire replacements were the most common types of maintenance required by truckers, and Giant began to garner a reputation for its efficiency and competence. In addition, the service center had the only truck wash between Barstow, California and Oklahoma City, Oklahoma and, as word of the facilities at the Travel Center spread, truckers would sometimes drive 350 miles out of their way just to get their rig washed.

Although tourists and local customers were always welcomed at the Travel Center, it was the intention of Acridge to cater to and treat the truckers as if they were royalty. Truckers were spending an average of between $100 to $150 on fuel alone, not to mention all the other purchases they made at the retail stores and restaurant. So Acridge arranged for a van to carry truckers back and forth from their rigs in the vast parking lot of the Travel Center, built 26 shower stalls of hotel-like quality for truckers who wanted to clean up between rides, installed laundry facilities, and a shoe shine. Perhaps most important of all, a trucker could order a 16-ounce t-bone steak for $10.95, have it cooked to order, and call home from the telephone situated on his table. As business boomed and more truckers began to arrive at the Travel Center, Acridge expanded his operation to include more retail stores and a new restaurant whose staff included a head chef trained at the highly respected Culinary Institute of America.

The 1990s and Beyond

During the early 1990s, Giant Industries continued its rapid growth. In 1993, the Travel Center alone reported that it pumped more than 20 million gallons of fuel. Over the years, the company had built up its transportation operation to include a fleet of 90 trucks that carried crude and finished petroleum products not only to its own facilities but a growing number of customers in the Four Corners region. At the same time, Acridge made an investment in acquiring a crude oil gathering operation located in San Juan County that included approximately 340 miles of pipeline.

By 1996, Giant Industries was one of the most successful petroleum products companies in the southwestern part of the United States. Having found its niche in the Four Corners area, the company increased its revenues from $301 million in 1992 to $499 million by the end of fiscal 1996. Giant Industries purchased its second refinery in 1996, located in Bloomfield, New Mexico, from the Gary-Williams Energy Corporation. This acquisition helped the company to consolidate some of its refining operations, lower transportation costs, and improve production. With the Ciniza and Bloomfield refineries working at full capacity, the company increased the number of barrels sold per day from 27,000 to 39,000 in less than one year. Because of the growing demand for more of its products, Giant has decided to initiate a capital project that will increase the number of barrels produced per day at both the Ciniza and Bloomfield refineries.

Also during 1996, Giant made a major purchase involving Diamond Shamrock, Inc. For $5.4 million the company acquired seven gasoline stations operated by Shamrock in northwestern New Mexico. This acquisition brought the total number of Giant-run gas stations to 56, largest of all the independents in the Four Corners region. The company also built two new combination service stations/convenience stores in Albuquerque, New Mexico and Sedona, Arizona and initiated a major campaign to remodel 28 of its existing service stations/convenient stores.

Having built an extensive network of service stations and convenience stores from one small gas station, Jim Acridge succeeded in an area of the United States where most independents have failed. Not intimidated by the major oil companies, Acridges confidence and determination have resulted in a firm that provides high-quality products and enviable customer service to travelers in the southwestern United States. Of all the compliments Acridge has received about his company, none is more satisfying than to hear truckers advising other truckers to go to a Giant station.

Further Reading

Barrett, William P., The Mother of All Truck Stops, Forbes, April 12, 1993, pp. 116118.

Byrne, Harlan S., Giant Industries, Barrons, May 13, 1991, pp. 3132.

Emond, Mark, Giant Industries Expands in Far Southwest, National Petroleum News, October 1995, p. 28.

Giant Buys Seven Stations, The Oil Daily, June 3, 1996, p. SW2.

Giants Profits Grow with Refining Sector, The Oil Daily, May 14, 1996, p. 4.

Kovski, Alan, Plant Purchases Help Giant Increase Profits, The Oil Daily, March 5, 1996, p. 3.

Mapco, Giant Industries Beat Segment Trend, The Oil Daily, October 31, 1996, p. 2.

Reid, Marvin, Flying High in Tough But Tempting Phoenix, National Petroleum News, September 1980, pp. 6066.

Victoria, Frank, How Giants Travel Center Shatters Old Truck Stop Image, National Petroleum News, March 1988, pp. 3238.

Thomas Derdak

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