The rapidity of some changes makes it imperative that businesses be able to change, adapt and be flexible in a way that was never thought necessary before. For lubricant manufacturing companies, globalization in the raw materials and additives markets is having a significant impact.

The scope for this discussion is huge, and we cannot hope to cover every aspect in this review. Therefore, we will focus on one segment of industrial lubricants, the metalworking fluid industry, because this sector is becoming increasingly complex for both end users and suppliers.

Industrial Specialties

Industrial lubricants account for about 35 percent of the total lubricants market. Specialties, which are predominately metalworking fluids and greases, represent around 10 percent of the total lubricants market, with metalworking fluids at 6 percent or roughly 1.9 million metric tons.

Growth in metalworking fluids mirrors that in the lubricants market, although for slightly different reasons. While the major growth has been in Asia, the movement of several car manufacturers to Eastern Europe in the early 2000s affected the European industry for a period of time, even though this effect has subsided. The additive and raw material market for metalworking fluids is typically around 15 percent of the total market, which gives a global market size of just under 300,000 tons. Within this sector, over 50 percent of the business for water-based metalworking fluids additive technology is dominated by emulsifiers and corrosion inhibitor additives.

The downstream consequences of the changes in the end-use industry only add more complexity to the other issues facing lubricant manufacturers and their additive suppliers. These issues include market overcapacity, especially in Europe; global environmental, health and safety expectations; increasing regulatory restrictions; globalization of end users; and the future direction of upstream chemical suppliers.

For purposes of this discussion, a raw material is something that has been refined, distilled or processed in some form to provide a degree of purity. An additive is something that has been formed for a specific purpose by modifying or changing the characteristics of the individual component or components. For example, oleic acid might be considered a raw material, but oleic acid alkanolamide might be considered an additive.

Metalworking fluid formulators must juggle five key factors in developing their products: operator safety, in-use performance, technology, regulations and environmental requirements. And while both raw material and additive companies must wrestle with these issues, the activity and direction of each can be quite different.

End User Expectations

The increasing awareness of safety in the workplace, the advent of REACH and the liabilities assumed by companies to protect their employees have all affected the way lubricants are considered prior to use in the workplace. This has been especially critical in the MWF industry because of the close contact the operator has with the fluid on a daily basis.

For this reason, the formulation components have changed over the last 25 years to create products that preferably do not carry any hazard warning label implications. However, as regulatory conditions have become more stringent, this has become increasingly difficult with the consequence that formulators have often looked outside traditional chemistries.

There is also an increasing desire to create products that do not require hazard labels. However, this is a complex challenge for water-based fluid technology because the components that provide long-term stability and control are often strongly labeled and carry the attendant negative perceptions.

Material selection in Europe will be significantly affected by the Cars 2020 white paper that, among other things, stipulates the emissions reduction expected from car manufacturers through the year 2020. These requirements will affect the development of new cutting fluids because carmakers will increase the use of nonferrous components to improve engine efficiency and reduce vehicle weight. MWF suppliers need to accommodate the nonconventional materials while also protecting expensive cutting machines that are predominately made from ferrous materials.

One example is the increasing use of composites to save weight. Once the preserve of high-performance supercars, these materials have now filtered down to mainstream cars. In addition, magnesium and aluminum alloys are now seen in many standard car systems.

Similarly, the aerospace industry, while still using materials such as aluminum, is increasingly using titanium in the defense sector and composites in mainstream plane design. All of these changes pose a complex and research intensive formulation challenge to the MWF supplier.

Another issue is that companies are increasingly looking to improve machining efficiency. An example is high-speed grinding where fluids have changed to meet the demands of higher speed cutting. However, water-based technology operating at high cutting speeds and in machine tools with smaller sumps often suffer from increased foaming.

On the materials front, companies are using magnesium alloys more frequently, and they want to machine these parts on the same lines as parts made of conventional materials. Trouble is, water and magnesium do not mix well, leading to problems with fluid stability, safety and long-term performance.

Regs & More Regs

Regulation is the single most influential factor affecting lubricant development over the last thirty years. The complexity on a global scale is immense, even with harmonized systems like GHS. The industry also has to comply with country-specific regulations in regions like Asia, local influences in Europe and state-based differences in North America.

Not only are global regulatory issues at different stages in their life cycle, but they also are constantly being modified and revised, depending on the lobbying and pressures applied by affected groups. In North America, the current concern is over chloroparaffins, with a potential phase out for all but very-long-chain products by 2017. In Europe, the concern is over formaldehyde and boric acid. In Asia, there is a constant merry-go-round of regional initiatives in terms of component registration.

For Europe, among this myriad of regulatory change sits the ever present requirements and adaptations needed to comply with REACH. The next key stage coming in 2018 will probably be the most significant step in this most demanding of all regulations.

Even now, many developers and manufacturers of industrial lubricants are starting to see the effects of the next stage. Additives are being withdrawn from the market on short notice, and suppliers realize that the cost of registering products with limited sales appeal will be prohibitive.

Many companies probably thought 2018 was a long way off, but the activity around small-volume additive and raw material registration has increased dramatically over the last several months. As 2018 draws nearer, the situation is likely to get worse, and many companies are spending a high proportion of their R&D activities on raw material replacement rather than new product development.

Chemical Industry Effects

According to a recent report by A.T. Kearney, by 2030 over 60 percent of the total global marketplace for chemicals will be owned by Asian companies. Following a growing and increasingly wealthy population, the automotive and construction industries, major users of chemicals, will be a principal influence. Location and market predominance will be key issues, which we are already seeing in some decisions affecting REACH registration.

The next few years will see significant changes in the way products are marketed in Europe. Some raw materials that have traditionally been used in metalworking fluids have the potential of being consumed in other nonassociated applications. A good example is the use of amines in Chinese agricultural applications that significantly affected the alkanolamine marketplace a few years ago.

How do we cope with this increasing complexity with a shrinking pallet of raw materials? Given the status of the industry, the short answer is to be adaptable and innovative.

With the significant reduction in Europes R&D capacity over the last twenty years and a reduced knowledge base either through ageing or lack of investment, we need to find ways to manage complexity at the customer interface. In response, some companies are becoming more focused on certain application areas, others are creating key areas of expertise.

Whatever the approach, companies need to manage customer expectations and the complexity of their solutions. This approach will favor addive and raw material suppliers that can increasingly provide a solution-based product offering along with reliable proof of performance data.

How will this affect the way we develop and create products in the future? There likely will be less technical freedom in the industry, with purchasers, EHS managers and business development specialists having much greater influence over the development process. Increasingly, companies will have to take a platform-based approach to product creation, with the key chemistry being common across a range of formulations to maximize global EHS acceptance and minimize the number of components in the platform.

Differentiation will result from creating the most capable and robust platform to which the so-called microchemistry or small-quantity but still influential components can be added. This has already begun in the grease sector, partly influenced by the needs of REACH and partly as a result of the forward thinking approach of the European Lubricating Grease Institute and its member companies who have jointly registered certain key platform components.

In water-based metalworking fluid additives, corrosion inhibitors and emulsifiers make up 50 percent of the total market and probably account for 10 to 15 percent of individual products. Therefore, for future development, it would seem logical to concentrate platform activity here and create a level of global consistency for the core chemistry of key product groups.

Package-style product development has been used for many years in Asia and the United States for slightly different reasons. While some formulators have suggested this methodology can compromise products, changes to manufacturing techniques are now creating a much more flexible approach to this concept.

Of course, there is still a need for R&D capability to bring some magic to the chemistry that will create differentiation between products. This is where formulators and suppliers need to work together to maximize product performance, innovate with suitable technologies and ensure global compliance.

In Summary

Europes industrial lubricant industry, and metalworking fluid sector in particular, is facing many challenges in the near future. The complexity of application requirements, changes in the chemical supply market and increasingly stringent regulatory expectations are creating a progressively more difficult marketplace.

The impending pressures of REACH, especially as 2018 approaches, will impel many manufacturers to change, modify and update formulations. It is important that these changes be carried out in a structured, cohesive and innovative way to ensure the industry progresses with performance-led initiatives rather than with a more widespread commoditization of technology.

On the supply side, platform product development logically favors the more specialized, industry-focused supplier that can show a level of proof of performance. Global EHS approval and long-term commitment to the market are critical. These companies should also look to form business partnerships with the lubricants industry.

While some of these companies are strong in manufacturing and development of chemistries, their connection to the application is sometimes limited. As a result, they are turning to specialist distributors to improve their linkage to the lubricants sector.

Many of these companies have traditionally worked in isolation, but they could reap some benefits from collaboration by using the platform approach. Here, a common methodology could bring significant commercial and technical benefits to suppliers and customers alike.

Finally, specialist lubricant companies must adapt strategically, commercially and technically to meet the needs of an increasingly changing business landscape. It is no longer feasible to wait and see with many of the potential regulatory restrictions.

Robert Stubbs is general manager of Sea-Land Chemical Europe Ltd., basedin Byley Cheshire, United Kingdom.
Contact him at robert.stubbs@sealandchem.com