In April, BP Lubricants Americas named Waterman to be its new chief executive, assuming responsibility for the companys lubricants business across North and South America. On May 1 he succeeded Peter Meola, who retired after leading the company for the past six years.

Waterman told LubesnGreases that while the Castrol brands do-it-your-self market share in recent years has grown in the United States, competition remains fierce in the quick-lube market, where the companys strategy is to work with select operators rather than open its own outlets.

Historically, weve taken a position that our expertise is not in quick-lube operations, but rather helping those with those skills leverage our offers to become more profitable, he said. In recent years, the quick-lube business has been very difficult, struggling with higher costs and maintaining profitability. Its hard to believe that there are still operators promoting $19.99 oil changes, but thats the reality.

He said Castrol has chosen to work with what it considers to be strong operators such as Oil Can Henrys, which is based in Portland, Ore., and has almost 80 stores in its chain, and American Lube Fast, Lawrenceville, Ga., with about 70 outlets in Georgia and Florida. These are operators who understand the value of brands and focus on providing very high quality service to their customers. This has been very successful and, going forward, we would like to help our established partners grow faster as well as create more partnerships.

Waterman said BP also has a number of partnerships with automotive OEMs that it will continue to mine for growth. BMW, VW, Audi, Ford and Premier Auto Group are our largest, he added.

Honing Its Edge

Joining Castrols U.S. operations in 1994, Waterman rose to general manager for the North America retail sales unit. Following BPs acquisition of Burmah Castrol in 2000, he moved to the United Kingdom as head of BPs U.K. fuels and convenience retailing business, overseeing 1,400 company and dealer owned gasoline stations. He was also a board member of the BP/Safeway joint venture and led BP into a new consumer loyalty program, Nectar.

Returning to the United States in 2004, he was appointed regional vice president for the Arco am/pm convenience retailing business, based in La Palma, Calif. Waterman returned to the lubricants side of the business in 2006, as general manager for U.S. Operations.

To continue growing now, Waterman said, the company needs to hone in on a few key areas of development.

We will continue to focus on developing superior, differentiated offers that are valued by our end customers and consumers, he said. We have avoided the commodity orientation that is so common in this industry, and instead have sought to be distinctive via technology, marketing and value-added services. This will continue to be our approach going forward.

Though small in size, he pointed out, Canada has traditionally been a Castrol marketing stronghold. Last year BP created a master distributor for that market, Wakefield Canada Inc., that is owned and run by a Canadian management team. This allows the business to gain significant ongoing focus and easier access to growth capital while we, as manufacturers of the product, are able to share in the growth of the business, he said. We have been very encouraged by the progress made thus far.

Right-sizing in Latin America

BP Lubricants business in Latin America has grown significantly over the past five years, too, according to Waterman. In Mexico, where there is a fast-growing middle class, our passenger car oil business has grown three times faster than the overall market over the last five years, he said. We are seeing retailers like Wal-Mart and Autozone expanding their operations there. Keys to growth have been distinctive products, developing the management team and a strong group of distributors that are committed to growing Castrol.

Even in Brazil – a notoriously difficult market where state-owned oil giant Petrobras has a lock on about 35 percent of the 970,000 metric ton lubricants market – the Castrol brand has built a firm foothold, with a respectable 4.1 percent market share, according to Petrobras estimates. The companys business in Brazil is now profitable and set to grow, Waterman said. The key to our growth has been right-sizing the business, shifting from direct operations to distributors and repositioning our brands to the premium segment, he said. Brazils economy is also growing consistently, and with a population that exceeds 100 million people, our prospects are very good.

Likewise, he added, Castrol operations in smaller countries – such as Columbia, Peru, Bolivia, Chile, Venezuela, Argentina and several Caribbean countries – are profitable and contributors to the companys success in the region.

Regarding the products pipeline, BP always looks for ways to refresh its Castrol GTX brand, which has been in existence for more than 40 years, he said. In the USA, we recently reformulated the product to provide superior protection against sludge, which is a real problem for consumers today. Our Castrol GTX High

Mileage was recently reformulated and now provides 17 percent more protection against oil burn-off versus leading oils. Weve recently extended the high-mileage franchise to the automated transmission fluid category and will soon launch Castrol GTX High Mileage ATF, specially formulated to protect older transmissions.

The company also has been expanding the North American reach of its heavy-duty lubricants over the past few years. Where heavy-duty oil production once was concentrated at its plant in Baltimore, the company now also makes them in Baton Rouge, La., Richmond, Calif., and Toronto. Recent product launches included Hypuron, a semi-synthetic diesel engine oil meeting API CJ-4 that promises to double engine oil drain intervals for fleet operators, and Tection Xtra CJ-4, a conventional mineral oil based version.

Growth isnt just about geographic expansion, Waterman wrapped up. We have developed global customer relationships with companies like BMW, Volkswagen and Wal-Mart that enable our business to grow as theirs grow, he said. We continue to seek out partners that are interested in leveraging our brands and technology to support their growth.