Verkol is nestled in the mountains of the Basque Country near Bera, in northwest Spain, 2 kilometers from the French border. The company was founded in 1923 by Jos Luis Moreno Luque and Fernando Elsequi Alday, whose grandson Carlos Elsegui de la Pea is the companys director general today. Quaker Chemical acquired Verkol in July 2015, and the company is in the midst of rebranding itself. We visited in June to learn more about the company and to see how the effort was progressing.
In the Beginning
At its inception, Verkol imported lubricant products from a U.S. company called Albany and Cooke for use in the steel and mining industries in Spains Basque Country, one of the countrys most industrialized areas. In 1927, Verkol started to produce its own lubricants, but at the same time a state monopoly for petroleum products started in Spain. Local and private lube manufacturers were restricted from manufacturing certain kinds of products such as automotive lubricants. That is why Verkol started to specialize in industrial lubricants at these early stages.
In 1960, Verkol partnered with Cato Oil and Grease Co. to produce some Cato products under a license agreement. Cato partnered with five other licensees around the world, Elsegui explained. This was a good relationship for us, he related, because the technical people from the companies met every two years and had very open exchanges of information. The collaboration ended in 1992.
Today, Verkol occupies a 41,000 square meter site in Bera that opened in 1972 and where the companys headquarters, R&D and production are based. The company employs 65 people and produces 18,000 tons per year of lubricating oils and 7,000 t/y of greases. In 2014, Verkol recorded revenues of approximately U.S. $33 million.
The Quaker Connection
In July 2015, Quaker Chemical Corp. acquired Verkol for approximately U.S. $40 million, in a transaction that the company said is consistent with Quakers strategy to expand its entry into the specialty grease market. Michael F. Barry, Quakers chairman, CEO and president, commented, This acquisition helps us expand our specialty grease platform by providing Quaker local grease manufacturing in Europe as well as giving us additional grease product technology and talent. Verkol also brings unique technology in continuous casting products that will provide us with opportunities to cross sell to our global steel customer base.
According to Laurent Barnagaud, Quakers marketing director, An important consideration in Quakers decision to acquire Verkol is that the company is one of the larger grease manufacturer in Spain, if not the largest. While Quaker was strong in the primary metals industry in Spain, the acquisition gives us a broader product range and customer base in the country.
We brought very complementary markets to Quaker, said Elsegui. And while we also served the steel industry, our products are used in different sections. So we helped broaden the Quaker portfolio.
He added that Verkol has found the deal to be very beneficial. A number of companies had been interested in acquiring us, he said. But our owners thought Quaker was the best fit because our products complement one another and our sales networks did not compete with each other.
Elsegui noted that the acquisition was good for Verkols labor force because it provides security for the future of the company. A lot of acquisitions cause quite a bit of displacement, but that was not the case with Quaker.
The Verkol acquisition joins Quakers previous purchases of Summit Lubricants Inc. in 2010 and ECLI Products LLC in 2014. Summit is a North American manufacturer and distributor of specialty greases and lubricants sold through major distributors and used in military applications. ECLI specializes in greases for original equipment manufacturers in several industries, including automotive, industrial, aerospace/military, electronics, office automation and natural resources.
Barnagaud explained that Quaker Chemical was founded in 1918 in Conshohocken, Pennsylvania, United States. After World War II, Quaker expanded into Europe in response to the reconstruction effort. We then entered markets in Asia and South America. In 2015, the company enjoyed total revenues of U.S. $737 million.
Quakers main European production facilities are in Amsterdam, Milan and Barcelona. In addition, the company acquired Binol AB, located in Karlshamn, Sweden, a biolubricants producer primarily serving the Nordic region. Barnagaud added, We recently opened offices in Dubai to serve the primary metals industries in the Middle East and Africa. We are proud of the fact that at least half of the steel mills globally are lubricated by Quaker rolling oils.
Verkols Product Line
Almost from the beginning, Verkol started manufacturing lubricants, Elsegui related. We began producing lithium greases in 1957 and lithium complex greases in 1980. In 1995, Verkol began production of calcium sulfonate greases. We were one of the first European companies to produce this type of grease. We also manufacture small batches of PTFE grease.
Besides grease, Verkol produces industrial lubricants, including H1 food grade lubricants, circulating oils and casting oils formulated with both mineral and synthetic oils. Grease represents a large part of Verkols production, and includes a very broad spectrum of technologies from calcium, lithium, lithium complex, aluminum complex to calcium sulfonate, inorganic, polymeric and PTFE thickeners.
Elsegui explained that besides Europe, Verkol serves markets in South America, North Africa, the Middle East and Asia-Pacific. Our export market is an area of growth for us, and will certainly be expanding though the Quaker network.
One of Verkols short-term goals is to begin manufacturing polyurea greases. We have the technology to do it, said Elsegui, but we dont yet have the production systems in place.
He added, We havent had the need to manufacturer polyurea greases in the past because we have a wide range of products, especially calcium sulfonates, that meet the needs of our customers. But Quakers strategy is to be a leader globally. And if you want to be a big player in the world, you need the widest range of products.
While Summit Lubricants already manufactures polyurea greases, they are not registered in Europe. For us to sell them here, we have to go through the REACH registration process and produce them in Europe, said Elsegui.
As might be expected, when we asked Elsegui to name his greatest challenge going forward, he immediately mentioned REACH (Registration, Evaluation, Authorization and Restriction of Chemicals). REACH is a big challenge to developing new products because it is a huge investment not only in equipment but also in testing and approvals. It is a long process and very expensive, he said.
We are registering a large number of soaps, he explained. And for many of them, there are consortia in Europe to help spread the costs. If you go alone, you dont know how much it will cost at the end of the process.
A short-term challenge facing Verkol is rebranding its products under the Quaker Chemical banner. They are making rapid progress, and the goal is to be completely changed over by the end of the year. The end goal is to facilitate Verkol product expansion into the Quaker network around the word and take advantage of Quaker brand equity in the markets they serve.
In concluding our discussion, Elsegui said, Everyone has good products, but not such great customer service or problem solving. This is a point in common with Verkol and Quaker.
He continued, I think we have been successful in the marketplace because of good quality, good service and good knowledge of the product and the applications. We have been very concerned about the capabilities of our sales network. And we have spent a lot of money in the last seven years to train our salespeople.
To this end, Verkol runs periodic training courses for its salespeople, presented by its technical and commercial staff. We have even hired experts from outside the company to train our people. Its one way we have been able to maintain customer loyalty. As proof of that statement, he noted that we have customers who have been with us since the 1920s, even though we are not the least expensive.