Grease: Good for the Bottom Line


MIAMI BEACH, Fla. – Adding grease to your product lines can be a profitable move for a lubricant marketer, but select your supplier carefully. Some grease manufacturers may send a salesman to call on your customers, an industry expert warned.

Paul Converso, marketing vice president of Battenfeld Grease & Oil Corp. of N.Y., told the Independent Lubricant Manufacturers Association annual meeting here Oct. 13 that adding grease to your product line has minimal market entry costs.

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Grease is an excellent associated sale with profits that typically exceed oils, Converso said. But before selecting a grease supplier, ask what is their policy on selling directly to the end-user market? Make sure youre not unpleasantly surprised.

Who Makes Grease?
Converso identified three categories of grease manufacturers: majors, independents and specialty manufacturers.

Major oil companies are international in scope and have broad, general grease product lines, said Converso. They rely on internal product development and a heavy brand emphasis across all their lines. And they usually manufacture internally, with limited outside manufacturing of their greases.

North Americas major-oil grease manufacturers include Citgo in Oklahoma City and Chicago; Chevron in Port Arthur, Texas; ExxonMobil in Olathe, Kan., and Beaumont, Texas; Petro-Canada in Toronto; and Shell in Houston and Calgary, Canada.

Independent grease manufacturers can be regional or global in scope, Converso continued. Their emphasis is usually on private label lines, with broader product line selection. The majority are privately held and, Converso cautioned, they have a varying approach to the end-user market.

Some of North Americas larger independent grease manufacturers include Battenfeld in Buffalo and Toronto; Chemtool in Crystal Lake, Ill., and Tehachapi, Calif.; Fuchs in Kansas City; Jesco in Kansas City and Rosedale, Miss.; Norlakes in Kansas City; and Royal Manufacturing in Tulsa, Okla., and San Antonio.

The specialty grease manufacturers are global, research and development driven, and are characterized by their limited, high-tech product lines and emphasis on specialty products. They focus on securing specialized, limited source approvals, said Converso, citing Duponts Krytox as an example. Specialty producers include Chemtura, Dow Corning, Dupont, Kluber Lubrication and W.F. Nye.

Selling Grease
North American grease sales exceeded 490 million pounds in 2008, said Converso, and failure to offer a grease line may allow a competitor to access your customers.

The steps to starting a grease sales program are simple, he continued. Step one is to determine market potential. Survey your existing and potential customers, said Converso. Youll get the best results by having your sales team inquire directly about products, packaging, current suppliers, volumes and prices. Evaluate the results and decide whether to move forward.

Step two is selecting a supplier and together developing a grease line. Major oil companies generally market direct and through distributor systems, while the specialty manufacturers may not have sufficient product lines or packaging capabilities. Independent grease manufacturers may be your best choice, Converso said, but be sure to review manufacturing and packaging capabilities, quality levels, whether the product line meets your needs, and whether the company will compete against you in product sales.

Keeping in mind that lithium greases are about 30 percent of the North American market, and lithium complex greases are another 37 percent, your basic grease product line will likely include an extreme pressure lithium grease, a GC/LB extreme pressure lithium complex grease, and a heavy duty lithium complex grease, Converso said.

If your market includes food and beverage plants, mining and construction, primary metal mills or railroads, your grease supplier will recommend additional specialized products.

Step three, Converso continued, is to be sure your sales team has sufficient grease I.Q. If theres a question, grease suppliers, industry organizations like NLGI International, and professional training companies all offer grease education.

When youre ready to launch, said Converso, inform all your employees as well as current and potential customers. Create hand-outs for your sales team. And create incentives for your marketing team. Converso noted that in his years of experience, money incentives are most effective for the sales force. And finally, said Converso, develop a sample supply program with good follow up.

When you give out a sample without following up, you might as well throw it in the trash, he said. Dont just give it away. They owe you a response.

And what does the future look like, to this grease industry pro? Converso predicted that North American volumes will continue to decline over the next five years, while volumes in China, India and Southeast Asia will continue to rise. He sees increased utilization of synthetic base stocks, and a relatively stable product mix.

Finally, said Converso, the next five years will see continued North American grease plant reductions and continuing raw material and packaging price increases.

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