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As noted in last months column, Shell was the big kahuna in the U.S. lubricants business in 2005. But not by much, when you consider that only about 10 million gallons separated Shell from second-place ExxonMobil.

Now, with the majors coming out of the final turn in the 2006 volume race and the finish line clearly in sight, ExxonMobil looks like it may take the checkered flag.

So how did ExMo get into position to win?

To start, its product portfolio includes a full line of conventional lubricants, synthetics, synthetic-blends, food-grade and environmentally friendly lubricants. These and their respective price and quality tiers positioned ExMo with the depth and breadth needed to compete on every turn.

In addition, ExMo entered new products in the race, introducing Mobil Clean 5000, Mobil Clean High Mileage, Mobil Clean 7500, and Mobil 1 Extended Performance in February 2005. This line was based on market research that showed a vast majority – 90 percent – of U.S. drivers would use engine oil that guaranteed protection for 7,500 miles. Moreover, consumers said extended drain intervals was a performance claim they understood and wanted. Even for drivers who dont want to extend drains, such guarantees were said to provide proof that the oil is of high quality.

Other data shows passenger car drain intervals have moved from roughly 3,500 miles to just over 4,500 miles in the past 10 years, and OEMs are now recommending intervals ranging from 5,000 to 10,000 miles. So clearly there was a significant unmet need (opportunity) in the marketplace.

ExMo slipped into position with a good qualifying setup when it put Chrysler, Ford and GM taxicabs through the paces with Mobil Clean 5000 and 7500 in Las Vegas, New York City, Michigan, Texas, Arizona and Minnesota. Capitalizing on these runs, its researchers turned out data that it said proved the new oils are capable of providing engine protection during extended drain.

ExMo also put a new high-performance product on the track by including Mobil 1 Extended Performance in its lineup. While it might look like Mobil 1 with a different paint job, ExMo said if you look under the hood you will find 50 percent more SuperSyn, 37 percent more detergent, and 36 percent more anti-wear additives. With that, it said, this product could deliver drain intervals up to 15,000 miles.

It then followed up with a big-bucks advertising blitz unlike any seen in recent times. The result was a significant uptick in its sales of higher-value engine oils, driven by push and pull-through marketing.

Beyond putting some new mettle on the track, the company also positioned itself by working for many years to capture the business of original equipment manufacturers. It currently enjoys the dealership business for General Motors (Goodwrench), Honda, Toyota and DaimlerChrysler (Mopar). In addition, it has the factory-fill product for Mercedes-Benz, and enjoys alliances with Mitsubishi, Porsche and others. And beyond passenger cars, in 2005 it was awarded a five-year agreement with Caterpillar to supply factory-fill and branded lubricants globally.

These OEM relationships are enviable, and contrast sharply with other majors who may have only one or two OEMs dealership trade. Considering the significant shift that has taken place over the past 10 years from Do-It-Yourself to Do-It-For-Me, it becomes clear that ExMos efforts here have also helped it to steer towards a 2006 win: Beyond pushing consumers to buy ExMo lubricants, its OEM business is pulling through demand.

If ExMo takes home the trophy in 2006, it will also be because it beefed up its drivers and hardware in the industrial segment of the business over the past few years. One example is its Integrated Lubrication Services program. This program focuses on improving the operational efficiency and profitability of customers plants. It includes hardware, software and consulting designed to assist plant managers to optimize start-ups, productivity, maintenance, lubricant disposal and reclamation, and other plant activity.

And finally, ExMo worked hard to assure minimal resistance from drag in the race by improving operational and supply-chain efficiencies and logistics. It kept a watchful eye on the return-on-capital-employed (ROCE) and earnings gauges.

So there you have it. If ExMo wins the volume race in 2006, it will not be by accident or a fluke. It will come by putting its best products and drivers on the track, working with a sharp pit crew, tuning its operation for maximum efficiency and minimal drag, working hard for a good qualifying setup, and adapting to changing track conditions.

And maybe there is another lesson here. That lesson speaks to those lubricant suppliers who smoke their tires, take the lead at the beginning, and make a lot of noise during the race with high volume/low margin business. Although these competitors might look like winners at any time during the race, they burn up a lot of fuel and rubber doing so.

Maybe ExMo knows this too, and part of its strategy includes watching and baiting the competition to run out of fuel, and/or spend too much time in the pits as they race for high volume/low value business.

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