AMSOIL: A Close Look

AMSOIL President Al Amatuzio and Executive Vice Presidents Alan Amatuzio and Dean Alexander discuss the past, present and future of The First in Synthetics®

(2007-2008 Archive)

In April, Lubes-n-Greases Automotive Editor David McFall visited AMSOIL corporate headquarters in Superior, Wis., to tour the AMSOIL facilities and conduct interviews for his feature article on the company, slated for the August issue of Lubes-n-Greases. His article incorporates information from an in-depth interview with AMSOIL President Al Amatuzio and Executive Vice Presidents Alan Amatuzio and Dean Alexander. Following is an extension of that interview.

What, specifically, does AMSOIL bring to the lubricants marketplace that other firms do not?

Al Amatuzio: AMSOIL is driven by quality. It’s how we survive. We are a relatively small company competing against some of the largest in the world. What sets us apart is the quality of our products. Our goal is to always stay ahead of the competition in terms of product performance. Base oil and additive suppliers know this, as well. They come to us with expensive technologies that other companies would have no interest in. AMSOIL insists on doing the right thing. When we developed the first synthetic motor oil, there was no market, but the product provided benefits other oils didn’t. Our products could help equipment last longer, improve fuel economy and reduce emissions. When AMSOIL introduced extended drain intervals in 1972, it was done because we figured out a way to do it and it was the right thing to do. It was right for consumers and the environment. We, like other companies, are in business to make money, but our approach has always been to satisfy the needs of the customer first. That’s what generates our sales and profits.
Finally, AMSOIL has the willingness and the ability to act and react immediately. When we see a need for a product or an opportunity to improve a product, we’ll do it. We’re not bound by a board of directors, heavy bureaucracy or industry constraints. We move quickly to provide the best possible technology for any given application.

Synthetics are a relatively small part of the lubricants market. Why is this so after you’ve been involved for 30 years?

Dean Alexander: U.S. vehicle manufacturers and the API have not made a push to differentiate quality levels of lubricants as is done in Europe. If we followed Europe’s lead and established several tiers of quality and performance, including benefits for these quality improvements such as extended drain intervals, synthetic lubricants would have a much larger share of the lubricant market, just as they do in Europe.

What trend do we foresee for synthetics? Will the new ExxonMobil initiative impact on your business?

Al Amatuzio: Synthetics have been on a long-term and consistent growth trend. We expect that trend will continue and most likely accelerate as the OEMs’ demands on lubricants increase and consumer demand for quality products increases as well.
We expect that ExxonMobil’s recent entry into the market with their version of extended drain interval lubricants will have a positive effect on our business. We were the developer and have been the leader in extended drain intervals. Having a major oil company finally adapt to our long drain interval philosophy and help us educate consumers about the viability of long drain oils, as compared to the 3,000-mile oil change brainwashing they have been bombarded with all of these years, will definitely help us in our efforts.

What has been your experience with your mileage guarantee? We’ve discussed this issue before, but I’d like it to be part of the interview. For example, how many claims against your guarantee have you had? How do you investigate? What has been the technical and commercial outcome?

Alan Amatuzio: Our mileage guarantee works perfectly, and our experience has been nothing but outstanding. All companies that produce products have claims. It is to be expected and AMSOIL is no different. Everyone in the lubricant business knows that oil or grease is always the first thing to be blamed for a mechanical problem and is almost never at fault. We receive around 20 engine claims per year, of which most can be easily explained. Some things we see are antifreeze leaks, leaking plenum gaskets, worn out engines and factory design problems to name a few. We also get the occasional unethical false claim.
Our investigation is quite comprehensive. We ask for all documents relating to the claim, such as maintenance records, mileage, type of service and repair invoices, plus we send a form to be filled out by the customer that gathers more information. We require an oil sample be sent to us for oil analysis, and oftentimes we will ask for parts as well. Phone interviews are often conducted with the customer and the repair shop. We hire independent expert investigators and engineers to review the failed parts and provide us with a report. We search for technical service bulletins from the vehicle manufacturer that may identify a problem.
We then write and send the customer an Investigative Findings Report documenting our results. We follow up by providing customers with technical assistance in arbitration proceedings where needed. Only in rare instances, when we have no explanation for the problem, even though the lubricant is not to blame, are claims accepted. While no one likes to have their claim turned down, generally our customers are appreciative of the effort we put forth investigating and explaining our findings. We place great importance on these situations.

Please discuss your marketing and distribution system. Do you advertise and if so, where, in what media and how much do you invest in this effort? Why haven’t you taken your product to the traditional aftermarket? Does your geographic location impose any marketing disadvantages for you?

Dean Alexander: AMSOIL INC. brings its products to market by means of a network of Dealers who both sell and service customers and accounts. AMSOIL Dealers are independent businesspeople who are offered a variety of methods for growing their businesses, including personal direct sales and selling to resellers (auto parts stores, quick lubes, etc.) and commercial accounts (fleets, factories, etc.).

Our independent Dealer network is a key component in our success as a company. A great deal of investment, therefore, has been made to train our Dealers and develop strong channels of communication, including classroom instruction (AMSOIL University), a monthly magazine, newsletters, literature and a variety of training materials.

AMSOIL advertising has focused on market niches, supporting sales by creating buzz and generating leads for Dealers. We utilize the same full range of marketing channels as most traditional manufacturers, including print advertising, direct mail, PR, trade shows, event marketing and internet. When AMSOIL was introduced in 1972, auto parts stores sold motor oil as a loss leader, as a commodity with no inherent value for less than 50 cents a quart. AMSOIL entered the market at a $5 per quart price point. With the product on the store shelf, it was difficult to convey those benefits that justified the cost of the higher priced product. To effectively sell the product required some education – a one-on-one sales approach. In 1973, the company introduced a marketing plan around a sales force of Independent AMSOIL Dealers who proceeded to put AMSOIL on the map.
Geography has not been an issue for us.

Three of your engine oil products are API “starburst” licensed and five “donut” licensed. Most of your engine oil products are not API licensed. What has been the effect, either positive or negative, of licensing on your marketing?

Dean Alexander: API licensing established a minimum performance level. We’ve always manufactured our products to exceed those performance levels. Only in the last 10 years have we decided to API license a handful of products to accommodate our product line for entry into the quick lube market. We’ve found API licensing to be a non-issue with our customers, and not having an API registration on the balance of our product lines has had no effect on our business or our marketing. The only reason we produced a product line with an API license was to overcome potential issues with the owners of quick lubes and their managers and mechanics, not because consumers would ever even ask or care about it.
In addition, the lack of base stock read-across guidelines for Groups III, IV and V, along with the industry’s obsession over chemical limitations in motor oil formulas without taking drain intervals and specific chemical volatilities into consideration, causes an artificial limit for the performance capabilities of motor oils and formulation flexibility.

What do you see as the technical advantages of synthetic motor oil vs. a conventional mineral oil?

Alan Amatuzio: High quality synthetic oils have longer service life; better thermal and oxidation stability, soot handling capability and viscosity retention; superior cold flow properties; improved fuel economy benefits and lower deposit formation, wear rates and volatility compared to conventional mineral oils. Simple technical reasons are chemically stable hydrogen saturated molecular structure, lack of impurities such as sulfur, lack of wax and they do not contain reactive aromatic and unstable naphthenic ring structures. Additives work better and last longer in synthetic base oils.

Can you give me figures on the growth trend of your firm since its inception and your projections into the future? Also, some information on how many employees you have, etc?

Al Amatuzio: AMSOIL INC. enjoyed tremendous sales growth with many years where sales doubled in the 1970’s, mainly due to high gasoline prices and worries over fuel economy. The 1980’s were relatively flat years due to low oil prices, less focus on high performance vehicles, etc. From 1990 and continuing today, double digit growth has been the trend. Consumers became aware that synthetics outperform petroleum products, performance vehicles of all kinds are on the comeback and quality is of increasing importance with consumers. We expect this trend will continue and most likely accelerate over the next 10 years.

AMSOIL INC. currently has over 210 employees in the U.S. and Canada and over one-half million square feet of manufacturing and distribution space.
AMSOIL products are currently distributed in over 26 countries. In the
U.S., Canada and Puerto Rico, AMSOIL products are sold through tens of thousands of independent distributors directly to individual consumers, to thousands of retail stores and to commercial end users. AMSOIL INC. manufactures all of its lubricants in Superior, Wis., and distributes them though 10 additional distribution centers throughout the U.S. and Canada.

How do you maintain quality control in your manufacturing plants?

Alan Amatuzio: AMSOIL has documented procedures and work instructions for every operation. We do a good job of training our people, and we conduct refresher training on a set schedule. We have a QC team in place that conducts regular audits. We use a three step, 100 percent inspection process. Step one, all raw materials are inspected and qualified in the laboratory. If the sample is sub-standard, the product is returned. Step two, every batch is inspected and qualified in the laboratory. Step three, packaging line samples are inspected prior to the filling operation and verified against the corresponding batch data. Every individual worker in manufacturing is accountable for his or her task by filling out and signing process charts at every operation.

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