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Shell Wants 80% |
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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? |
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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 |
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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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it is.
Please contact us via e-mail at tom_glenn@jobbersworld.com,
or direct at 732-494-0405.
Thank you
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