ILMA Compoundings - April 2020 - 27

S

ince antiquity, lubricants have played an important supporting role in generating economic value by enhancing
the performance of virtually all mechanical operations.
With the advent of the oil industry in the mid-19th century,
petroleum-based lubricants rapidly displaced traditional animal- and vegetable-based lubricants. Rapid improvements in
petroleum processing and chemical technology, from vacuum
distillation to solvent extraction to hydro-processing, along
with the development of specialty additives, have fostered
continual and dramatic performance improvements that
have led to ever-more-useful lubricant products. Although
accounting for only about 1% of petroleum consumption by
volume, lubricants are essential to the smooth functioning of
the North American economy. Many vital industry sectors -
including agriculture, manufacturing, distribution, freight,
passenger and personal transportation - depend on lubricants to maintain efficient operations.
The Independent Lubricant Manufacturers Association
(ILMA) and the ILMA Foundation commissioned IHS
Markit to assess the contributions that the companies meeting the Association's eligibility criteria for manufacturing
membership (the ILMA manufacturing-eligible companies,
or the ILMA Sector) make to the North American economies of the U.S., Canada and Mexico. ILMA estimates
that the ILMA manufacturing-eligible companies produce
more than 25% of the automotive lubricants (including toll
blending for non-ILMA lubricant marketers) and over 70%
of the metalworking fluids (MWFs) used in North America.
The economic contribution analysis quantifies how
specific economic activity catalyzes multiple rounds of
contributions to key metrics such as sales, employment,

wages and gross domestic product (GDP). For this study,
IHS Markit developed a customized model to trace how
streams of economic activity initiated by ILMA manufacturing-eligible companies stimulated three levels of economic
contribution throughout the U.S., Canadian and Mexican
economies during 2018. The first level, designated as direct
contributions, encompassed the economic contributions
resulting from ILMA members selling their products in
U.S., Canadian or Mexican markets (both within their
domestic markets and across borders). The second level,
indirect contributions, captured the follow-on effects that
rippled through the multiple tiers of ILMA members'
extended supply chains (i.e., suppliers' suppliers, etc.).
Finally, the third level, induced contributions, covered the
economic contributions due to the consumer activity of
people who work for either ILMA manufacturing-eligible
companies or businesses within the extended supply chains,
as illustrated below.
THE ILMA SECTOR ACCOUNTS FOR AN ESTIMATED
27% OF LUBRICANT SALES IN NORTH AMERICA
Based on the criteria for ILMA manufacturing membership,
eligible companies only include those with a strong business
focus on lubricant manufacturing and do not include major
oil and chemical companies. Based on this definition, IHS
Markit estimates that the ILMA Sector accounted for 2.4
million tons of overall lubricant sales in 2018 (excluding toll
blending), 27% of the total North American market of 9
million tons.
Many of the ILMA manufacturing-eligible companies
have a business focus on specialty industrial lubricants,
particularly MWFs. IHS Markit estimates that the ILMA
Image courtesy of IHS Markit

27
ILMA Compoundings - April 2020

Table of Contents for the Digital Edition of ILMA Compoundings - April 2020
