Industrial production in the 27 European Union member states fell in March 2020 by 10.9% from the previous month and continued to slump into April by 17.3%. The decline coincided with the first wave of the virus sweeping across the continent. By the end of the year, many companies had adapted and were able to stave off the worse impacts of the second wave, some even managing modest growth.

“Global disruption in supply chain and shortage in key raw materials, shrinking industrial activity, dampened consumer demand, and a major slowdown in transportation have put our industry under considerable stress,” Serra-Holm said.

The industries hit hardest in terms of lubricant demand were aerospace and automotive, she said. Automotive accounts for almost half of all yearly demand for lubricants with much of the rest being industrial.

Throughout 2020, assembly lines and suppliers’ factories shut down across the continent as new automobile registrations tumbled by almost 25% by the end of the year. That trend continued into 2021, compounded by microchip shortages, according to the European Automobile Manufacturers’ Association.

To make matters worse, the market share of electric vehicles sales over the same period increased to almost 12%, up from 5%, as people took advantage of purchase incentives to avoid public transport.

In all the five main European lubricant markets – France, Germany, Italy, Spain and the United Kingdom, which combined account for 75% of the market – sales shrank across all segments. Metal working fluids were especially affected because of low demand for primary metals and depressed automotive manufacturing.

“It is difficult to pinpoint a single factor behind the geographic differences in demand drop, as this was the result of concurring factors, such as the extent of lockdown measures, the specificity of the country’s industrial tissue, as well as the extent and impact of supply chain disruptions,” Serra-Holm said.

As thousands of passenger aircraft sat on the tarmac throughout last year and into this year, demand for aerospace lubricant also failed to get off the ground.

“Demand is likely to rebound differently across product groups and countries,” she said.

Positive Note

As vaccination and containment measures began to take effect, the EU’s economy rebounded in the second quarter of 2021, clocking record growth of 14% year-on-year. This bodes well for lubricant demand.

Serra-Holm said that the EU’s transition to a greener, more circular economy and digitalization of supply chains will be positive for Europe’s lubricant makers.

“The growth opportunities that the development of green economy entails for our industry could be substantial, with large sectors – such as manufacturing, renewable energy, and agriculture – most likely to be impacted by it,” she said. “Another key success factor for our industry will be leveraging digitalization to capture value growth.”

Value growth through digitalization could include fluid management systems, real-time used oil analysis and stock control, and marketing, as well as using e-commerce to sell commodity products, like hydraulic fluids, freeing up resources to dedicate to specialties, like metalworking fluids, where a high level of service is usually provided. “The most successful companies will be those which will best position themselves for the value pools of the future,” Serra-Holm said.