Manufacturers try to Champion the Merits of Biodegradable Lubricants
17 December 1999
Manufacturers Walk a Slippery Road in Efforts to Champion the Merits of Biodegradable Lubricants
SAN ANTONIO--Dec. 17, 1999--Competing in established lubricant markets is difficult enough, without having to prove price performance ratios and the merits of going green at the same time.As biodegradable lubricant manufacturers are finding out, they still have to demonstrate superior product performance.
Although several legislative movements, such as the Clean Air Act, compel various industries to reduce emissions, market participants must rely on consumer awareness to promote their products. According to new strategic research conducted by Frost & Sullivan, "U.S. Biodegradable Lubricant Markets," manufacturers produced nearly 50 million gallons of biodegradable lubricants, resulting in total industry revenues of close to $500 million last year.
"Converting participants in Industrial, Automotive and Aerospace industries will require justification of price performance ratios. This is prompting many manufacturers to reduce overhead while focusing efforts on superior lubricant development," states Canaan Chan, lead analyst for this research. Low-priced alternatives, such as mineral oil-based lubricants, continue to pose a threat to biodegradable manufacturers. In response, manufacturers are attaining low-cost positions through vertical integration of raw materials.
Following Europe's lead, U.S. biodegradable lubricant manufacturers are instituting biodegradable standards for their products. While this may ensure legitimate biodegradable norms, manufacturers must continue to publicize their products' value, in addition to their environmentally friendly status.
Although consolidation is prevalent and meeting price/performance ratios remains difficult, new entrants continue to contend for market share.
"Consumer perceptions regarding company expertise crucially impact manufacturer decisions and present opportunities for companies that can establish brand performance recognition," says Chan.
In addition to direct market share competition from non-biodegradable manufacturers, biodegradable producers must also contend for the same raw materials. As Chan explains, "The variety of ethylene production uses causes unstable supply and demand cycles. As a feedstock for synthetic biodegradables, an abundance or dearth can wreak serious havoc on manufacturing schedules because ethylene accounts for such a large portion of synthetic production costs."
While customer education will continue to challenge manufacturers, competitive price/performance ratios are expected to drive industry growth. Frost and Sullivan Industrial Chemicals analyst, Sophie Wong, projects moderate to strong growth throughout the 1995-2005 forecast period.
Frost & Sullivan presents Market Engineering Awards to companies that have worked hard to make a positive contribution to the Industrial Chemicals industry. The Market Engineering Leadership Award is presented to the company that has best identified market drivers and restraints and developed effective marketing strategies to capitalize on industry dynamics. This year's 1999 Market Engineering Leadership Award is given to Hatco Corporation for their superior market engineering leadership, allowing them to make significant market share gains. Their achievements are expected to set future market standards.
Frost & Sullivan has identified the following companies as market participants in the Biodegradable Lubricant Markets: Agro Management Group Inc.; Akzo Nobel Chemicals Inc.; Amoco Corporation; Aqualon Company; Arch Chemicals Inc. (Olin Corporation); BASF Corporation; Chevron Corporation; Conoco Inc.; Dow Chemical Company; Exxon Company, USA; Exxon Chemical Americas; FMC Corporation; Hatco Corporation; Henkel Corporation Chemicals Group; Huntsman Corporation; ICI Americas Inc.; Inolex Chemical Company; International Lubricants Inc.; Mobil Corporation; Shell Companies; Stepan Company; Texaco Lubricants Co. of North America; Union Carbide Corporation; Related Companies: Amsoil Inc.; CITGO Petroleum Corp.; Houghton International; Jellinek, Schwartz & Connolly Inc.; Omni Tech International Ltd.; Pennzoil Company; Quaker State Corporation; Valvoline Company (The).
Frost & Sullivan is an international marketing consulting and training company that monitors the Industrial Chemicals industry for market trends, market measurements and strategies. This ongoing research is used to complement a series of research publications such as European Bio Lubricant Markets, and is used to support participants with customized consulting needs. Free executive summaries are available to the press.
"U.S. Biodegradable Lubricant Markets"
Report: 5795-39 Publication Date: December 1999 Price: $3,450