Shell Wants 80% |
According to JobbersWorld's contacts, there
is yet more change underway at Shell's US
lubricants business. Steve Harmon, Vice
president, Lubricants Americas will soon be
boarding a plane back to the UK. And in his
place has stepped Lisa Davis. And now that
she is in the saddle, marketers say Davis has
been doing a road show of town-hall type
meetings with its marketers over the past
month or two and some are very concerned
about what they are hearing. Specifically, as
it relates to Shell pushing for "80%
alignment" among its marketers.
In the words of a number of marketers who sat
in on these meetings, Shell now says, to be
aligned, 80% of its marketer's lubricant
sales must be with Shell and the only bulk
they can sell is Shell.
Marketers say they can understand how a
small- to mid-size Shell marketer might be
encouraged by this goal. The reason they
might is because it holds out hope that a
marketer of this size can pick up additional
volume in buy-backs and maybe even capture
some of Shell's direct sales business if it
works to align. And for some, the prospect of
picking up Shell's direct sales volume seems
greater now then before since Shell says it
will not call on accounts directly if an
account purchases less than 25,000 gallons a
year. Consequently, some of Shell's direct
business could theoretically go to a
distributor trying to align.
But whereas some marketers might be motivated
by Shell's alignment goals, others, in many
cases the big horses that pull large volumes
of Shell, say they would rather unhook
themselves from the Shell wagon then to limit
their, and their customer's choice by boxing
themselves in with one supplier.
In addition, several added, lubricant
distributors are much larger and far more
savvy today then they were in the past. And
because of this, they hope Shell has
adequately weighed the risks and benefits of
its 80% alignment goals. In addition, some add
that the definition of "80%" alignment
remains unclear. And at the end of the day,
it may become more palatable if it's further
defined by geography, product segment,
primary areas of responsibility (PARS) and/or
others.
Because in the words of one large Shell
marketer, Shell's alignment push is a high
stakes gamble that could come at great cost
if Shell tries to muscle it in. Further, one
marketer summed up the views that
JobbersWorld frequently hears when speaking
with most Shell marketers, that is, "If Shell
wants its distributors to align; the company
should first focus on improving Shell's
logistics and communications, and basic
business practices to become more marketer
focused." Because until that's done,
marketers say, it would be risky business for
them to put all their eggs in a Shell basket.
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So what do distributors say About the Goodwrench Price Decrease? |
Distributors sounded off loudly about the
story we ran yesterday about GM decreasing
the price of Goodwrench (see link below). The
first, and definitely my favorite letter to
the editor was that I, the writer of
JobbersWorld, took a back, and safely buckle
seat on the story by saying nothing more than
"Go Figure" in the title with regards to the
Goodwrench price decrease. That letter was
followed by the question, "Is it possible
that GM (Government Motors) has a government
subsidy allowing unfair price competitiveness?"
Then there were the others. For the most
part, those comments spoke to the historic
pattern that OEM prices increased every six
months to a year (Honda and Toyota were every
6 months). Based on that history, they say,
OEM pricing looks very different from the
rest of the industry. Car dealers know that
"eventually" their costs will catch up to the
industry. Yet they also know their prices
will only change every 6 months to a year.
Accordingly, they are confident in the fact
that they have "stable prices" and don't have
to deal with changing prices every 60 to 90
days like the rest of the industry might. As
a result, their price changes tend to be at
least six months behind others in the
lubricants business.
Adding to this, several responded to the
article by saying the OEM brands have been
'hammered" by the various independent
regional brands. Enough so that the OEM's are
coming back to their lubricant suppliers
(predominetly ExxonMobil) to ask, why is the
"independent" brands priced so low and are
the OEM oils that much better?
But regardless of the lag, and how the OEM
suppliers respond to the questions, those
who took the
time to write and call JobbersWorld say GM's
price decrease on Goodwrench puts a great
deal of pressure on the independent
lubricant manufactures. Because at the end of
the day, the GM price decrease nets out to
a $0.65 gallon differential when you consider
that most in
the industry moved lubricant prices up $0.40
a gallon in the last month and at the same
time, GM moved its
price down by $0.25 a gallon.
With that said, I revert to the title of
yesterday's story, "Go Figure." A
company (GM)
that filed for Chapter 11 bankruptcy
protection announces a price
decrease on lubricants when virtually
all of
its competitor have no choice but to push
through a price increase due to the higher
cost of base oils.
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Dennison Lubricants 'Goes Green' With Safety-Kleen |
Dennison Lubricants, Inc. is "going green"
with EcoPower, a new motor oil that is
environmentally friendly and priced similar
to standard motor oils. EcoPower is now
available in all six New England States.
"EcoPower extends our services to customers,
including auto dealers, service stations,
public works garages and fleet management
businesses, among others," said Tim Dennison,
president of Dennison Lubricants. "Having an
environmentally-friendly motor oil is an
essential product for serving our customers
and demonstrating our own commitment to
earth-responsible ways to use and remove
commercial lubricants, including oil."
EcoPower motor oil is manufactured from
recycled motor oil by Safety-Kleen, based in
Plano, Texas. In 2008, Safety-Kleen collected
more than 225 million gallons of used oil and
recycled approximately 140 million of it into
base oil products for re-use in the
marketplace. Safety-Kleen's EcoPower meets or
exceeds all applicable specifications set by
the American Petroleum Institute (API) and
the Society of Automotive Engineers, and is
currently used by the U.S. military, numerous
state governments and automotive fleets.
"Re-refining makes solid environmental and
business sense," said Eric Zimmer senior vice
president of marketing for Safety-Kleen.
"Turning used oil into high-quality
lubricating products conserves a valuable
resource and removes a potential pollutant
from the environment. It takes up to 85
percent less energy to produce a gallon of
lubricating oil from used oil than to produce
the same oil from a gallon of crude, and the
end product is identical to traditional motor
oils made from crude and meets the same
stringent specifications."
EcoPower motor oil is now available in 5W-20,
5W-30, 10W-30 and 15W-40 viscosity grades. In
addition, all major U.S. car manufacturers
have approved the use of Safety-Kleen SAE
5W-20, 5W-30 and 10W-30 ILSAC-certified motor
oil in all their cars. The EcoPower SAE
15W-40 grade has also been approved by
leading heavy-duty engine manufacturers.
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Contact Us With Your News |
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