'HIGHER PROFITS 2001' for Independent Lubricant Manufacturers; New Report on Benchmarks and Best Practices by PetroTrends and Kline & Company

    LITTLE FALLS, N.J., April 19 PetroTrends and Kline &
Company have announced a joint venture research study that puts the power of
benchmarking and best practices in the hands of independent lubricant
manufacturers.
    According to Thomas F. Glenn, president of PetroTrends, Inc., a Metuchen,
NJ-based consulting firm, the research report, titled HIGHER PROFITS 2001 -
INDEPENDENT LUBRICANT MANUFACTURERS, "provides independent lubricant
manufacturers with the insights and information needed to objectively compare
their financial and operational performance with that of other lubricant
manufacturers of similar size and with similar product slates."
    This comparison, known as benchmarking, provides a means for independents
to determine if such operating expenses as salaries and benefits, sales and
marketing, and fleet/vehicle operation are in line with those of their
competitors.  Beyond just operating expenses, the study also provides
comparative insights into the cost of goods sold (basestocks, additives,
packaging, and others) and a comprehensive set of financial performance
measures, including gross margins, gross sales, accounting practices,
technical service, and product development.
    According to Glenn, it is unfortunately all too common for an independent
lubricant manufacturer to delay a rigorous and objective examination of
financial and operational performance until a "problem" arises.  And a problem
is typically not recognized until it has already made a substantially negative
impact on the bottom line of the business.
    To illustrate this point, Glenn cites as an example an independent
lubricant manufacturer with transportation costs at 4.5% of revenue.  Although
this percentage is significantly higher than the norm for lubricant
manufacturers of similar size and with a similar product mix, this company
doesn't realize there is a problem because the transportation costs have not
exceeded its management's pain point of 5.0%.
    The degree of the problem, although it has not yet been realized, is very
significant when one considers that the average transportation costs for a
company in this category amount to 3.0% of total revenue.  If an independent
lubricant manufacturer has $10 million in sales, and its transportation cost
is $500,000 (5.0%) instead of $300,000 (3.0%), this represents a $200,000
reduction in bottom-line profit.
    Although it might be unusual for most independent lubricant manufacturers
to have an unrealized problem of such magnitude, a surprisingly large number
of lubricant manufacturers suffer from anemic profits due to poor performance
in one area or another, according to William R. Downey, vice president of
Kline & Company's Petroleum Practice.  "Although companies can survive 'profit
anemia' when the economy is strong," Downey states, "cash draining from the
cuts and abrasions of an inefficient operation, an overcompensated staff,
noncompetitive spending on raw materials, or poor accounting practices can
send the competition into a feeding frenzy when the economy is soft."  He
adds, "Majors can be expected to join the feeding frenzy as a result of
consolidation, compressed margins in automotive lubricants, and other business
dynamics that are prompting majors to hunt farther outside their typical focus
for business opportunities."
    HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT MANUFACTURERS provides
independent lubricant manufacturers with objective benchmarks of their
financial and operational performance.  According to Downey, "These benchmarks
can be used to fine-tune performance and prepare an independent lubricant
manufacturer for the leaner, even more competitive business environment we are
moving into."
    Although Glenn agrees that benchmarks are really a "report card" on
financial and operational metrics and by themselves do not directly correlate
to higher profits, he is quick to point out that "The study combines
benchmarking with best practices, and this combination has a proven track
record of success in providing the tools needed to achieve higher profits.
Simply stated, benchmarks provide lubricant manufacturers with the metrics
needed to objectively assess financial and operational performance and to
identify gaps.  Best practices take it to the next level by providing a means
to identify, adopt, and adapt the business practices of companies with
exceptional performance."
    Another key to success in the report's ability to provide a path to higher
profits is its attention to detail in development of "peer group comparisons."
This development is based the project team's real-world experience in the
lubricants industry and its clear understanding of the impact that product
slates, geography, economies of scale, and other factors have on benchmarks
and best practices.  According to Glenn, "It would be inappropriate to compare
the technical service and product development costs as a percentage of sales
for an independent that primarily makes metalworking fluids with one that is
primarily engaged in manufacturing private-label engine oils.  Likewise, it
would be equally inappropriate to compare the transportation cost of a
lubricant manufacturer based in Brooklyn, New York, with one based in Council
Bluffs, Iowa."
    HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT MANUFACTURERS is one in a
series of research studies based on the principles of benchmarking and best
practices that have been compiled in a joint-venture effort between
PetroTrends and Kline & Company.  Other reports in the series include:

    -- HIGHER PROFITS 2001 - FUEL MARKETERS
    -- HIGHER PROFITS 2001 - LUBRICANT DISTRIBUTORS
    -- HIGHER PROFITS 2001 - MAJOR LUBRICANT MANUFACTURERS

    This collaborative project draws on decades of industry-specific
experience with major companies, independents, distributors, and jobbers to
provide the highest-quality benchmarking and best practices report to
independent lubricant manufacturers at an affordable price.
    To obtain a brochure for HIGHER PROFITS 2001 - INDEPENDENT LUBRICANT
MANUFACTURERS or other reports in the Higher Profits series, please contact
Tom Glenn at PetroTrends, Inc. at (732) 494-0405 or via e-mail at
Tom_Glenn@petrotrends.com.