The commander of the Navy Exchange Service Command, Rear Adm. Robert J. Bianchi, spoke about gas prices, the effect of the economic crisis on Navy Exchanges and the plan to roll out the new Navy uniforms during an extended interview Monday at Naval Air Facility Atsugi.
Can you explain the reasons for the high gas prices locally? What can servicemembers here expect in the near future?
We buy our fuel through a contract that the Defense Energy Support Center negotiates, and so our price is fixed. Right now [NEX pays] $4.19 a gallon, and it’s been that price since the spring. Through an agreement that we had with AAFES, we try to set our price to the average price in the continental United States. But, I will tell you that our philosophy is that we do not usually price gas below cost. … Right now our [retail] price is $4.06, so I’m losing 13 cents on every gallon that we sell. … I think right now we kind of hit a point where we can’t really go much lower until DESC resets that price. Now, my understanding was they were supposed to set a new price at the beginning of the fiscal year. I intend to follow up on that when I get back and find out when they are looking to renegotiate a contract price. Assuming that price is lower, then we’ll be able to lower our price correspondingly to the sailors. So, I’m sensitive to that but we have a dual mission here. Part of it is to provide items and goods at a savings, but it also is to provide dividends to our MWR.
Have NEX sales been affected by the economic crisis in the U.S.?
I would’ve answered no if you had asked me three weeks ago, because in actuality we were treading below plan until about June. And then we implemented a price-cut program, “Best Brand, Best Buys,” where we tried to identify key commodities that are mainly pegged to our enlisted families. Things like diapers, detergent, the everyday necessities. People naturally came in for those but then they also saw that we had other items at very good prices, because we run about 20 percent below outside prices on average. So I think what happened was people came in for those value buys and then they also said, ‘Hey, there’s some good prices on clothing, shoes, electronics, whatever,’ so our sales actually went up. September came around and that’s when the market started getting jittery. Gas prices were kind of creeping up and we saw a decline. This past month we were probably about 6 percent below our plan. We’re not totally insulated but I think we have a good value proposition. This is kind of where we can shine in these times of economic crisis. We’re going to have some tremendous promotions for Black Friday and Thanksgiving and for the holidays. … Times are tough, no doubt, but I think we’re in a position where we can meet the needs of our sailors.
What is being done to ensure a smooth transition to the new Navy uniforms in light of the PT uniform shortage that occurred when they were introduced earlier this year?
We learned some lessons on the PT uniform. Part of it was the initial shortfall really came from the fact that I think the manufacturers, when they bid on the product, didn’t realize almost what they were getting themselves into. The PT short is a new design. The manufacture of it proved to be a little more challenging to the manufacturers than they anticipated. So in the beginning, they weren’t meeting their initial production quotas. They’ve since caught up and they kind of got it now and they know how to manufacture them. Part of the other reason that the shortages were kind of amplified was we rolled out the PT uniform very quickly. It was deployed over three months. The service uniform, which is the khaki shirt and the black pants for the enlisted folks, and the working uniform, the camouflage blue and gray digital, is going to be rolled out over two-year periods. So, we have a little more breathing room there to make sure that we have adequate stocks in place. That being said, so far we’ve launched the service uniform in the western district in San Diego and it has gotten extremely great reviews. We’ve got ample stock on the shelf. … So service uniform, I think that’s well in hand. The working uniform, that starts in January and right now Defense Logistics Agency, who’s our provider for that, so far are delivering what I believe to be adequate stocks.
What kinds of changes will Navy Exchange undergo in preparation for the air wing move from Atsugi to Iwakuni?We’re pretty much treating [Atsugi Navy Exchange] as a continuing enterprise here. We’re not planning for any drop-off in sales. We think that there’s a base here that’s going to remain. In fact, I believe there are even a couple of squadrons that are going to come in, so it’s going to grow before it potentially declines. We’re going to put a brand new, 10,000 square-foot addition onto the NEX here, the main store. That’s about a $7 million investment. We’re also going to renovate the home store here on the base. We’re doing renovations to the beauty and barber shops, so we’re not giving up an inch with Atsugi.
