CSW Industrials, Inc and Pennzoil-Quaker State Company dba SOPUS products, a wholly owned subsidiary of Shell Oil Company that comprises Shell’s United States lubricants business, have announced the execution of a definitive agreement under which Whitmore Manufacturing, LLC, a wholly owned subsidiary of CSWI, and Shell will form a joint venture to market, distribute, and sell lubricants, greases, coolants, reliability products, and related industrial services to the North America rail and US mining sectors. The JV, which will be named Shell & Whitmore Reliability Solutions, LLC, is expected to be owned 50% by each of Whitmore and Shell.
Whitmore has been a partner with Shell since the early 2000s as a private label manufacturer for its global mining business. CSW says leveraging Shell’s extensive distribution network in the Americas increases the opportunity to sell Whitmore technologies through the Shell organisation.
The statement said the JV “will combine the strengths of Whitmore and Shell to offer multi-sector expertise; advanced equipment technologies and services; and an integrated product portfolio that meets the unique needs of companies engaged in North America Class I, II, and III rail (excluding municipal transit systems) and US mining (excluding quarries).” Key Shell lubricant brands in mining include Rimula heavy duty diesel engine oils, Tellus hydraulic oils, Spirax transmission oils and Omala gear oils. Whitmore is a key supplier of oils and greases to mining in its own right with brands like Innerseal, Decathlon, Paragon and Caliber.
Joseph B. Armes, CSW Industrials Chairman, President, and Chief Executive Officer, commented: “Today’s announcement represents a first step toward offering a comprehensive portfolio of products and solutions to rail and mining customers. When Shell first approached us about this opportunity to form a partnership, our team quickly realised the value in an expanded commercial relationship with a world class organisation to drive accretive growth for shareholders, promote proprietary products and technologies to customers, and increase capacity utilisation at Whitmore’s existing manufacturing facility.”
“Whitmore and Shell customers are at the heart of the rationale for creating this JV,” noted Machteld de Haan, President of Shell Lubricants Americas. “The resilient B2B sectors are key pillars for the future of Shell Lubricants, where we see a lot of opportunity for growth to support the market. Partnering with Whitmore, a leading provider of reliability products, high-performance greases, friction modifiers, and rail products, in creating this JV helps us to progress toward the execution of this strategy.”
The JV will be staffed by Whitmore and Shell sales and technical professionals with extensive experience in the rail and mining sectors, enabling the successful transfer of relationships, technical knowledge, and sector expertise. The products manufactured and sold by the JV will benefit from Shell’s and Whitmore’s proprietary industrial lubricant and grease formulations and technologies.
A key part of the JV’s success will be its manufacturing agreement with Whitmore. The JV’s production assets will be co-located at Whitmore’s Rockwall, Texas facility and operated by Whitmore, where the JV will benefit from Whitmore’s scale and expertise. This structure is expected to optimise Whitmore’s existing manufacturing capacity through increased production output to be contributed by both Shell and Whitmore, and to position the JV for future growth. The plan is to gradually migrate Shell grease production to the Rockwall facility for production consistency and utilisation.
An additional benefit of the companies’ collaboration is an expanded commercial relationship between Whitmore and Shell, which is expected to significantly broaden the reach of Whitmore’s reliability products through Shell’s extensive distribution channels throughout the Americas (excluding the JV’s business sectors).
Armes added, “Through this JV and our expanded distribution relationship with one of the premier brands in the reliability industry, we expect to expand our reach across the Americas and to enhance utilisation at our world class Whitmore Manufacturing facility in Rockwall, Texas. We look forward to strengthening our partnership with Shell, while supporting the effort with our decades of experience in the production of small batch customised products for specialised applications.”
The JV is subject to customary closing conditions and expects to commence operations in the first half of calendar 2021. As Whitmore and Shell work toward the successful formation of the JV, each company’s representatives will provide separate communications to respective in-scope customers with key information regarding the potential transition of business to the JV.
