Jobbers World News
August 11, 2009

  • Shell Wants 80%
  • So what do distributors say About the Goodwrench Price Decrease?
  • Dennison Lubricants 'Goes Green' With Safety-Kleen
  • Contact Us With Your News

  • 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.

    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.

    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.

    Contact Us With Your News

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