The state of the worlds economy has had significant implications for mergers and acquisitions in the lubricants industry, Gosalia said. Consolidation now proceeds rather slowly, and in cases where there are deals, they are mostly on a high-value basis. However, deals that have been on hold may move forward as the economy improves.

Gosalia, who is based in Mannheim, Germany, highlighted major activity in 2012 in the lubricants industry:

• Cepsas acquisition in February for an undisclosed amount of Chevrons lubricants business in Spain, Portugal and Gibraltar.

• Calumet Specialty Products acquisition of three lubricants businesses: Hercules (a manufacturer of synthetic aviation and refrigeration lubricants) from Ashland, Inc., for an undisclosed sum in January; TruSouth Oil (automotive oils and lubricants) for an undisclosed sum in January; and Royal Purple (automotive, industrial, marine, motorcycle and racing lubricants) for approximately $335 million in June.

• Brazilian sugar and ethanol producer Cosans $100 million July acquisition of U.K.-based Comma Oil Chemicals Ltd. in March. Comma was a wholly owned subsidiary of ExxonMobils Esso Petroleum Co. that produces lubricants and additives. Cosan also purchased ExxonMobils lubricants business in Bolivia, Paraguay and Uruguay in 2011.

• Gulf Oil, a part of Indias Hinduja Group, recent acquisition of U.S. metalworking fluids maker Houghton International for $1 billion.

Gosalia said that ongoing mergers and acquisitions in the lubricants industry continue to follow a trend Fuchs found in a study of the structure of the global lubricants industry it conducted seven years ago. According to that study the global lubricants industry changed significantly between the mid-1990s and 2005.

The number of lubricant manufacturers with production volumes larger than 1,000 tons, according to the study, decreased from 1,700 market participants to slightly more than 700 by the end of 2005. Consolidation and concentration was much stronger among small-sized and independent lube manufacturers, decreasing from around 1,200 companies in 2000 to about 600 by 2005.

At the end of 2005, the top 10 lubricant manufacturers held around 50 percent of the worldwide lube market, while the other half was shared by more than 700 manufacturers, the study indicated.

The global mergers and acquisitions activity in the lube industry by number of deals followed the trend of acquisitions of global chemical companies at least through this year, Gosalia said. The parallel between the lubricants and chemicals industries is instructive, he added. Mergers and acquisitions in chemicals are down in 2012.

Even though there is pressure to grow and create substantial financial reserves, there is a high level of uncertainty perceived [in the chemicals industry] by senior management, Gosalia continued, referring to a recent article in ICIS Chemicals Business Magazine. He said the euro crisis impacted earnings expectations of companies targeted for mergers and acquisitions as well earnings expectations of the companies that might have been buyers.

So while there still will be deals in the chemicals industry, they will involve more mid-sized level deals, he suggested.

Following his discussion of the current trends in mergers and acquisitions, Gosalia turned to energy sustainability, declaring, I think the sustainability megatrend presents great opportunities and challenges for producers seeking to enhance and diversify their downstream business.

He noted that the United Nations designated 2011 as the International Year of Chemistry and 2012 as the International Year of Sustainability for All.

Our core business, Gosalia told UEIL delegates, is the blending of lubricants, which supports sustainability targets in economic, ecological and social areas, the so-called three pillars of sustainability.

He added that Fuchs has embraced sustainability as a corporate philosophy, and has signed the code of responsible conduct for business. In the past companies needed to take care of the three Ps, which were profit, profit, profit in a sustainable manner. Nowadays it is still the three Ps, but they rather stand for profit, planet, people.

Delivering sustainable products is something the chemicals and lube industry has done for many years, but the benefits are not always fully appreciated, Gosalia continued. Its about making the entire value chain more efficient, more effective, more transparent and with less environmental impact.

Sustainability may sometimes sound like a buzzword, but I think it will remain a driving force in our industry, Gosalia stated. And for our industry, this means it’s no longer just about what, but how we make lubricants.