By: Russ Gager
When it comes to its product line, Schaeffer Manufacturing Co. believes What makes it or breaks it is how you bake it.
It's not the sort of dessert you would see Martha Stewart preparing, but cooking up a great lubricating oil is not unlike a master pastry chef preparing a gourmet cake.
"We select very high-quality base oils and then use proprietary blending and formulation techniques," declares Steve Brewer, vice president of sales and marketing for Schaeffer Manufacturing Co. "The way I describe this, I can bake a cake, and take egg and milk and water and flour, and roll it all out and stick it in an oven, and when it's done, it looks like a cake.
"But a pastry chef, if he is using the very finest quality products and then applying his expertise, he's going to make something markedly different than my cake," he concedes. "It is about the components you select, and the technique and technology you use to combine those components."
Brewer makes sure his company cooks up the most innovative lubricants and additives for the many industries that rely on his company's products, such as mining, heavy construction, agriculture, trucking, fuel storage and marine. Finding niches in the lubricating needs of these industries enables Schaeffer Manufacturing to prosper without competing directly against the lubricating products of major oil companies.
"We've got a gold mine in Alaska," Brewer maintains. "Three years ago a customer switched to our grease, and that's what they are most impressed by. Even though it is full-bodied and not thin, it still flows and pumps even at minus 20 or 30 degrees F because of synthetic chemistry."
Mud pumps used in oil drilling run on an oil that Schaeffer Manufacturing specially formulates for them. Biodegradable lubricants that can be used in environmentally sensitive areas are another niche the company is carving out.
"It seems people are willing to pay the extra cost as long as they can get good performance," Brewer notes. "You compare the price of the lubricant to the price of the downtime." Instead of charging a premium price for crucial products, Schaeffer chooses a mid-range price and tries to get all of a company's lubricant business.
Better Living Through Lubricants
As a compounder/blender with a direct sales force, Schaeffer Manufacturing's suppliers bring their innovations to the company, knowing that Schaeffer has the research, development and sales expertise to bring innovative products to market successfully.
The corporate culture at Schaeffer Manufacturing, which was founded in 1839, relies on the sales representatives dealing directly with customers. "We take a very minimalist approach to the management of our sales force," Brewer explains. "We don't mess with them. We let them go out and build the relationships with the customers and meet the customers' needs, and they give us feedback on how to change what we do to meet customer needs better."
Brewer is proud of the certification of his sales force. "Our training program is well-known," he asserts. The Society of Tribologists and Lubrication Engineers is the governing body of the lubricating industry and administers several certifications, including the certified lubrication specialist (CLS) certification.
"It's a very difficult test," Brewer testifies. "I took my master's degree, and it whipped me. It was a tough, tough test. They made it tough so everybody and his brother couldn't get it. Only 900 people in the world hold these CLS designations. We made a commitment years ago we would have more CLS guys than any specialty company. Today, we have more than the next five specialty companies combined. We feel great about that."
Steady Growth
Schaeffer Manufacturing has chosen not to compete with major oil companies on the consumer level. "At $100 million in annual revenue, we're a player in the market," Brewer insists. "These guys know who we are." But Schaeffer made a strategic decision to avoid competing with them on price and sales volume.
Schaeffer Manufacturing was able to hold off price increases when the cost of oil spiraled out of control. "In 2008, when our competitors were taking increases every four to six weeks, we took two price increases in the entire year," Brewer maintains. "So when they started to come down, we held off on a third price increase.
"Our whole model is about a direct relationship with the customers - not through a distributor, or Web site, or catalogs or any other model," he emphasizes. "It's slow growth - you're not going to double the size of your company doing it that way. But you have a very solid base and a very steady growth curve. That's what we're after. We're a whole lot more like the tortoise than the hare."