Lubrizol Corp. gets third CEO …

Lubrizol Corp. gets third CEO in as many years

Mary Rhinehart, a longtime Johns Manville executive, has been named Lubrizol’s interim president and CEO.

https://www.bizjournals.com/cleveland/news/2022/03/11/lubriz… Behind paywall

An illustration of Berkshire’s deep bench. How many internal candidates do you suppose there are, for a CEO slot of a billion dollar company?

Also an illustration of how really big problems, at a big division, can go un-noticed. Wasn’t this Sokol’s acquisition?

Anybody know more?

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Lubrizol has been a bad investment gone worse. The two plant fires in past three years has literally added fuel to the fire. $$ value destruction to MSR??

Lubrizol was bought on the premise that rational pricing had returned among the small group of significant suppliers. But that didn’t change the fact that the base business - lube oil and fuel additives - was serving a low to no growth industry demand. I don’t know how well that premise has held - quit keeping up with the industry.

This market situation was illustrated by Lubrizol’s attempts to diversify - an ill fated acquisition in oil field chemicals (that cost BRK) and an ongoing attempt to compete in specialty chemicals outside their base business to which they bring few if any significant advantages. Results aren’t good. But apparently hope remains eternal.

Warren made the mistake of giving his new CEO free access to capital when he first acquired them, and the results haven’t been good. Hopefully he has a tighter rein on them now.

And the recent fires haven’t helped.

Needs to be treated as a cash cow for whatever they can generate. Not that BRK needs more cash. But beats throwing good money after bad.

WEB admitted he knew nothing about the industry when Sokol brought it to him. He was seduced by the prospects of a turnaround. Should have passed. (I retracted a stronger statement)

I posted similar thoughts to friends in 2014. Unfortunately, they have proven out. Can publish if anyone cares.

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I think Sokol was a bit of a con man. Warren is usually a good judge of character, but he missed this one. It happens.

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I posted similar thoughts to friends in 2014. Unfortunately, they have proven out. Can publish if anyone cares.

texirish, I appreciate your input, especially since I know very little about Lubrizol. I’d be interested in seeing what you posted in 2014 if you have it handy. Thanks.

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Texirish,

I would also appreciate reading your notes about Lubrizol from 2014. Thanks in advance.

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Does the transition to EVs and/or hydrogen fuel cells threaten the Lubrizol business?

Lubrizol has a long history as a technology leader. Specialty chemicals qualifies as a potentially excellent technology business. The necessary moat requires investing in research and good leadership.

Before Berkshire, Lubrizol was well into venture capital for new startups. What happened to those ventures?

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Before Berkshire, Lubrizol was well into venture capital for new startups. What happened to those ventures?

Up front, I don’t know.

I do know that the acquired CEO tried several diversifications with BRK’s capital that didn’t work out. So he retired when BRK wrote off several hundred million dollars in his oil field venture.

They still seem to be trying. I take these as indications that growth in their base business is poor. E.g., competing with J&J in health sciences to diversify.

Industry technology in fuel and lubricants technology is pretty advanced after many decades. In a market that’s under attack by climate change, hard to separate oneself from competitors. Largest competitor is a spin-off of Exxon’s Paramins business into a JV with Shell’s similar business. So tough competition in the base business.

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Lubrizol was best known for their motor oil additive packages. Oil refiners could buy the additives for their own motor oil basestock to create their own motor oil meeting SAE requirements. Essentially they were buying Lubrizol technology.

As always, competitors copy your best products and margins decline. Constant innovation is required to maintain margins. Patents are often the moat.

Otherwise you must diversify. Or become a cash cow. Inventing new business lines is difficult. Better to fund promising start ups and hope for a winner.

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Gee, folks. This thread is from March. Anything new on Lubrizol?

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