SIC 2992
LUBRICATING OILS AND GREASES



This category includes establishments primarily engaged in blending, compounding, and re-refining lubricating oils and greases from purchased mineral, animal, and vegetable materials. Petroleum refineries engaged in the production of lubricating oils and greases are classified in SIC 2911: Petroleum Refining.

NAICS Code(s)

324191 (Petroleum Lubricating Oil and Grease Manufacturing)

Industry Snapshot

Slow growth has bedeviled the mature U.S. lubricants industry since the 1990s. The industry's estimated 414 establishments shipped $6 billion worth of product in 2000. Manufacturers of lubricating oils and greases employed 10,344 people in 2000 and produced more than 50 million barrels of finished compounds annually.

The fastest-growing segment continued to be synthetic and synthetic blend lubricants. Although they represented only 11 percent of the market, synthetic product sales were expected to rise at an 11 percent clip annually through 2003. Synthetics have gained popularity because they're longer lasting and less toxic than conventional lubricants.

In a similar vein, an area under development was eco-friendly vegetable-oil lubricants. These new compounds, which blend a variety of familiar oils such as canola and soybean, were touted as being nontoxic and renewable, thereby greatly reducing the environmental impact of producing and disposing of lubricants. What's more, some research indicates vegetable-based lubricants can perform better in motor vehicle engines and other applications than their petroleum-based counterparts.

Organization and Structure

Manufacturers in this industry compete directly with petroleum refiners in many instances. However, some argue that the increasing degree of specialization required within the lubricants market gives lubricant manufacturers an edge over general refiners in that specialized equipment and multiple blending agents are more difficult to maintain in an integrated refining plant than in a lubricants plant.

Product Overview. The several thousand different lubricant products manufactured in the United States fall into three categories: automotive lubricants, industrial lubricants, and greases.

Within the automotive category, the three main types are crankcase oils, transmission and axle lubricants, and fluids for hydraulic torque converters and fluid couplings used in automatic transmissions. Each category had subdivisions based on viscosity, or resistance to molecular rearrangement or flow. Automotive lubricants kept various parts of auto bodies and engines running smoothly by cushioning adjacent metal pieces, oiling moving parts, and keeping dirt out of combustion chambers.

Industrial lubricants range from machine oils to steam-turbine oils. These products serve similar purposes as automotive lubricants, with added endurance capacity, which allows them, for example, to prevent rust from high-temperature steams. Viscosity represents the main difference between lubricant uses. In 1997, the U.S. market for industrial lubricants was worth about $3 billion. Growth of industrial lubricants was expected to remain lower—less than 1 percent annually—than other segments of the industry through the late 1990s.

A lubricating grease is a solid or semisolid lubricant composed of a fluid lubricant with an added thickening agent. Generally the fluid base is petroleum derived, while the thickening agent usually consists of soap made from aluminum, barium, calcium, lithium, sodium, or strontium. Sometimes, if wide temperature variations will be encountered in use, the fluid base is a synthetic, such as silicone or polyalkylene glycol. In some instances, non-soap thickeners such as modified clay or fine silica may be used. The trend in grease manufacturing in the late 1990s was toward longer lasting products.

Lubricating oils accounted for more than 75 percent of the industry's dollar sales, while greases amounted to less than 7 percent and miscellaneous lubricants brought in the remainder. The single largest market for lubricating oils was the consumer market, which accounted for about 25 percent of the industry's shipments.

Industry Leaders

Pennzoil-Quaker State Company, based in Houston, Texas, led the U.S. lubricants industry in the early 2000s with an estimated 37 percent market share. Formed by the 1998 merger of the lubricants businesses of Pennzoil Company and Quaker Chemical Corp., Pennzoil-Quaker State took in $960.5 million from its lubricants and consumer products segment. The firm also runs the Jiffy Lube quick-oil-change chain and other oil-related businesses. Lubricants and consumer product sales accounted for about half of the company's total sales.

Valvoline Company of Lexington, Kentucky, was another leading producer. A division of oil-refining giant Ashland Inc., Valvoline produced automotive and industrial lubricants and maintained a sizable presence in the consumer market. In 1999 Valvoline posted sales of $1.26 billion. These results included revenue from the company's oil-change outlets as well as from sales of non-lubricant car care products.

Large, integrated oil companies, often dubbed the "majors," also supplied a substantial portion of lubricant output. These included Chevron, ExxonMobil, and BP Amoco. The majors participated in the lubricant industry as a side enterprise to their oil exploration, production, refining, wholesaling, and retailing operations.

America and the World

Although the United States was the largest national market for lubricants, on a regional basis, Asia consumed the most. Based on 1996 estimates, Asia purchased 29 percent of the 8.25 billion gallons of lubricants made worldwide. Asia has also been the fastest-growing regional market. North America was second largest in consumption, at 26 percent of global demand, followed by Central and Eastern Europe (18 percent), Western Europe (14 percent), and Latin America (8 percent).

Further Reading

Ashland, Inc. Annual Report. Russell, KY, 1997.

"Chemicals, Fluids Demand Expected to Top $6 Billion by 2003." Aftermarket Business, December 1999.

Messina, Philip. "Lubricant and Lube Additives Face Tough Times." Chemical Market Reporter, 24 August 1998.

Papanikolaw, Jim. "Veg Oil-Based Engine Lubricants Impact Market and Environment." Chemical Market Reporter, 7 June 1999.

Pennzoil-Quaker State Company. Annual Report. Houston, TX, 1999.

United States Census Bureau. 1997 Economic Census. Washington, D.C.: GPO, 1999.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

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