Lubrizol CEO sees opportunities to cut auto emissions, serve emerging markets
Eric Schnur feels the weight of opportunity — in a good way.
Schnur is chairman, president and CEO of Lubrizol Corp., the Wickliffe, Ohio-based company that started making lubricants for motors in 1928. The company still can say that half the world's vehicles rely on Lubrizol science.
Today Lubrizol makes additives and materials that "gointa" everything from cosmetics and pharmaceuticals to motor oil.
Schnur, a chemical engineer, started working at Lubrizol in 1987 as a co-op student from Penn State University. He rose through the technical and marketing ranks (including a stint in Singapore) to president and chief operating officer in 2016, adding the titles of chairman and CEO a year later.
In 2011, billionaire Warren Buffett and his Berkshire Hathaway Inc. acquired Lubrizol, which had been a publicly traded company, for $9 billion in a bet on industrial growth in emerging countries, according to Reuters.
Schnur talked with me about opportunities at Lubrizol, which have taken an unexpected turn during the pandemic. This interview was edited for clarity and brevity.
So what's it like to lead a company owned by one of the most famous investors of all time?
People are always surprised to hear this, but if you talk to nearly any Berkshire company, I would imagine they say the same thing — it hasn't really changed much. Berkshire is famous for buying companies and then letting management run the companies.
Now, we're not 100% alone because Berkshire is a public company, so we have to report our results up through Berkshire. That was the biggest change for us — we went from being a public company to being a small piece of a really large organization. Most employees didn't notice anything other than we no longer had a stock ticker.
Being part of Berkshire Hathaway comes with some benefits, doesn't it?
Private ownership allows you to focus completely on what your priorities as a company are, as opposed to needing to spend a lot of time with shareholders.
We've got more financial capability to do acquisitions with Berkshire. When we were public, we had to borrow money or issue stock if we wanted to make a major acquisition. Berkshire has more than $100 billion in cash on its balance sheet.
When we look at acquisitions, we still have to find something with a good strategic fit and investment return. But we do have the capability to do a much bigger acquisition today.
How did Lubrizol diversify into advanced materials from its traditional lubricant additives business?
In 2004, Lubrizol acquired BF Goodrich's specialty chemicals business, Noveon, in Brecksville. We've added between 10 and 15 acquisitions to that business that focus on life sciences and engineered materials.
Lubrizol's businesses have always had strong technologies, even our lubricants business. But we take a different approach, so it's not just chemistry we're selling.
For instance, the average personal care product might have 10 or 12 components. Knowing how to balance these components and then testing and validating that they work in the finished product are critical. Add to that understanding the end-user like a consumer marketing company does, and you have a fairly unique combination.
How has CV19 affected the business?
We have product lines that were down 30% or 40% earlier in the year. I've never seen that kind of a decline. But the whole health and wellness area has been strong because of the pandemic. We make the thickener that basically turns alcohol into hand sanitizer. That's in incredibly high demand.
The reality is the stuff that is in high demand won't be enough to offset the declines in our other product lines. But we know this pandemic eventually will end. So we have to remember what our priorities are as an organization: keep our people safe, and make sure we're serving our customers and supporting our communities.
What is Lubrizol's greatest challenge in the next five years?
Realizing our potential to grow our business and have an impact on challenges in the world. It's a matter of getting everybody aligned along the same objectives and understanding what they're accountable for so they can be empowered to achieve.
What excites you the most about your work at Lubrizol?
Having a true impact on carbon emissions from transportation. For the past five decades, nearly every research dollar we've spent in our transportation lubricants business has been to try to improve the efficiency and reduce the fuel consumption of transportation, whether that's in a driveline lubricant or an engine lubricant. So we've set a target by 2040: We want to help enable a 50% reduction in emissions from light-duty vehicles.
Electric vehicles also are going to need a lot of technology. So the whole area of energy storage is a potential opportunity for us.
We're a leader in CPVC for plumbing systems, right? Construction and plumbing systems are really large markets in India. The growth opportunity there is like nothing we've seen before.
