Market Topics

Firmly Planted in America


JEFFERSONVILLE, Ind. – Along a golden cornfield here in rural America sits a Japanese oil company with its logo of a Greek god. Every day, jet-black railcars lined up on tracks opposite the blue streaming waters of he Ohio River each deliver approximately 23,500 gallons of base oil to this blending and packaging facility. Bulk additives arrive daily by truck.

Since October 1992, Idemitsu Lubricants America Corp. has been turning these key components into lubricants – predominately engine oils and automatic and manual transmission fluid – for some of todays most popular auto manufacturers.

The first thing that strikes a visitor to the 30-acre site is that few of the facilitys 52 employees actually work on the plants blending floor. We are 100 percent automated, said Tammi Walts, vice president and general manager of manufacturing. Automation is extremely accurate and gets it right the first time. Our blend first-time pass rate is over 99 percent.

Up a flight of narrow stairs is a small, glassenclosed mission control room that serves as the plants nerve center. Inside, blending specialist Don Hartman oversees the automated process through a central computer system.

Our distributed control system is located here, and from this point we control and monitor all of the blending operations as well as conduct monitoring of other production areas such as filling and the tank farm, Hartman told LubesnGreases during a visit in August. Blending is the hub of our plant where raw materials are fed in, mixed under automated recipe control and then sent out as finished products to either storage or packaging.

The plant uses in-line and regular batch blending to produce over 17 million gallons of lubricants annually. A majority of the companys finished products – 85 percent – are destined for the automotive sector and its aftermarket business. The rest are metalworking and maintenance fluids for industrial applications such as coolants, rust preventives industrial chain oils, turbine oils and greases

To ensure quality, Waltssaid, all incoming raw materials – including API Group I, Group II, Group II+ and Group III base oil – undergo thorough testing by a team of on-site chemists and analysts.

In total, the facility manufactures over 220 individual formulations and over 800 stock combinations. It distributes lubricants throughout the United States, Canada, Mexico and Central and South America and exports products elsewhere around the globe, as well.

Location, Location

ILA was the first whollyowned overseas subsidiary of one of Japans largest oil and energy companies, Tokyo-based Idemitsu Kosan Co. Ltd., which was established in 1911. When the parent company was looking for a location to set up a North American operation, it initially scouted areas in Ohio and Kentucky but settled on southern Indiana. Running along the banks of the Ohio River, Jeffersonville lies in the metropolitan Louisville, Ky., area. The logistics were perfect, said Walts. The area gives convenient water and rail access.

When the site was chosen and the plant constructed, it was intended to be close to both its suppliers and its main customers, the auto manufacturers to the north. As auto plants have cropped up in the South in recent years, the location is again proving to be key. Aside from these manufacturing facilities in Indiana, Idemitsu has sales offices in the Detroit and Los Angeles areas to handle the companys new business ventures including Mexico and South America.

A New Page

In fall 2006, ILA strengthened its U.S. operations with two critical transformations. First, that September, the company changed its name from the Apollo America Corp. to Idemitsu Lubricants America Corp. Our founder, Sazo Idemitsu, was interested in Greek mythology so we have Greek brand names like Apollo and Daphne, explained Walts. Our logo is the head of the Greek god Apollo, she said.

Last year, ILA President Masaru Toriyama – with a 32-year tenure at Idemitsu – decided to change the name back to its Japanese origin. Most of our foreign offices like those in Southeast Asia, Singapore, China, India and Europe have Idemitsu in their name, so I decided to unify the name, he said.

Idemitsu wanted to strengthen its name in markets throughout the world and become more recognizable to our Japanese customers in North America, added Walts. With an approval from Tokyo, the name was changed.

Then, last October, parent company Idemitsu Kosan, previously privatelyowned, had a limited initial public offering and became listed on the Tokyo Stock Exchange. Going from private to public did not change our business, said Toriyama, who is based in Detroit. However, the added capital has made the company more financially stable. Idemitsu Kosans estimated value is $30 billion, he said.

New Neighbor, Old Rival

The changes came just as Nippon Oil – Japans largest oil company and Idemitsus longstanding rival – opened its first U.S. blending plant, in Alabama. Of course this makes for a more competitive market, but we dont have to be more aggressive, said Toriyama. The American market is very big. Maintaining the highest quality lubricants are most important and our top priority.

While Nippon has the largest share of Japans lubricants market, ahead of Idemitsu, ILA maintains a bigger chunk of the U.S. lubricants market ahead of Nippon. According to Toriyama, Idemitsu ranks ninth and Nippon thirteenth in worldwide lubricant sales. (Other industry sources rate them as roughly equal in size.)

The technology that we have, that comes from years of research and development, is one of our advantages, said Walts. ILA can offer its customers all the technology of a multi-billion dollar company like Idemitsu Kosan of Japan, and the service and responsive care of a small company.

The Road Ahead

Today, the employees and the facility adequately meet the companys production goals and there are no plans to add any more U.S. Plants. If you talk about the lubricant business in the U.S., the demand is stable, said Toriyama. The company looks forward to expanding operations in Central and South America, where it does business but has no plants, he said.

As for Jeffersonville, there are plans to increase the size of the on-site warehouse space and tankage capacity in the next few years, according to Walts.

Careful not to compete with its own customers, Walts says that Idemitsu would also like to expand more into the private-label, aftermarket business because of its ability to blend special, high-level synthetics. Some of the companys best-selling branded products are its line of industrial fluids, sold under the Daphne name.

But right now, the company is focused on its primary mission of supplying auto manufacturers – particularly the Japanese car makers it followed to this continent – with the highest quality lubricants. Which brings up an obvious question: How has ILAs business altered as Japanese cars have emerged as a powerhouse in the American automobile market?

Replies Toriyama, As the Japanese automakers have sold more cars, we have grown right in line with them, and plan to continue to do so, long into the future,

Related Topics

Market Topics