Moving quickly to consolidate after its acquisition of Pennzoil-Quaker State Co., Shell Oil Products US said last week that it will sell or close seven lubricant blending and packaging plants by the end of 2003.
The announcement came just over three weeks after Shell purchased the automotive consumer products marketer.
Our goal was to identify these synergies and announce this plan as soon as possible, Vice President of Lubricants David Pirret said. Moving fast not only helps us realize the efficiencies of the acquisition, it also answers questions for employees at plants which are affected and those that are not.
The list includes two plants in Shreveport, La., and one each in St. Louis, Alameda and Vernon, Calif., Seattle and Bluefield, W.Va. All except the Seattle plant were owned by Pennzoil-Quaker State. Shell also plans to relocate to Houston a regional distribution facility that Pennzoil-Quaker State had operated in Shreveport.
The plants that Shell is shedding employ a total of 400 people. Officials said the rationalizations will contribute approximately $20 million of the $140 million in savings that Shell aims to recoup following the merger.
Executing this plan represents one of the largest opportunities to capture synergies for the new Shell Lubricants, Pirret said. It also provides the platform to capture additional savings and improvements across the supply chain. One of our key objectives from day one has been to retain customers and margin, and integrate the two companies without any disruption to our customers and consumers of our products.
Shell will retain nine blending and packaging plants in the United States. They are located in Newell, W.Va., River Rouge, Mich., Charleston, S.C., Wood River, Ill., Vicksburg, Miss., Long Beach, Calif., Portland, Ore., Metarie, La., and Houston. The latter two are grease plants.
We chose which ones to close partly as a matter of logistics, Marketing Communications Manager Gordon Dunn said. It was also a matter of the number of people affected, as these were some of our smaller plants.
There may not be a great deal of clamor to buy lube plants these days, but Shell said it will strive to find purchasers for all seven facilities.
Do I have anyone ready to buy one at this moment? No I dont, Dunn said. But our endeavor is hopefully to sell them. Anyone who buys one would probably do it for strategic or financial reasons.
In addition to the jobs at the blending and packaging plants, Shell has already eliminated several hundred lubricants positions, with decisions on more still to be made. Initially, the company said it planned to cut approximately 1,200 jobs, or 15 percent of those in the combined lubricants businesses.