Quality fuel and oil additives can improve fuel economy, extend an engine’s operating life, and reduce the need for expensive repairs. For firms in the automotive, aviation, and similar industries, the use of additives can also decrease operational costs. Fuel prices have remained above pre-pandemic levels. Therefore, firms must use every resource at their disposal to get the most mileage out of their fuel. Moreover, engine repairs are usually the most expensive line item in vehicle and equipment servicing budgets. Firms can find substantial cost savings by improving engine efficiency and life by using fuel and oil additives.
Some firms may look for ways to purchase fuel and oil additives directly for use in their internal operations. Other firms, such as fuel stations and auto supply retail outlets, may want to offer their own clients these specialty products. However, not every firm has the resources in-house to develop the best additives. When a firm needs a special chemical formulation but can’t produce it itself, it can rely on a process known as contract manufacturing or toll blending.
What Is Contract Manufacturing or Toll Blending?
Only two types of companies can offer firms the kind of complex chemical fuel and oil additive products they need. These types are toll manufacturers and contract manufacturers. Toll manufacturers have the operational capacity to take a client firm’s raw materials and use them to develop the chemical products they need.
The term “contract manufacturing” is often used interchangeably with “toll blending,” especially when discussing the synthesis of fuel and oil additives. However, unlike toll blenders, contract manufacturers typically source the raw materials they need to create the final chemical products ordered by their clients. By sourcing the raw materials, contract manufacturers are often able to create an ongoing revenue stream with clients who will require frequent replenishment and thus, will have an ongoing need for the manufacturer’s product.
Why Contract Manufacturing Is Optimal for Fuel and Oil Additive Procurement
Specialized equipment often demands specialty additives. Experimenting with off-the-shelf products can, at best, cost money and waste time. And at worst, these non-specialized products can result in equipment damage that requires expensive repairs. Developing a capacity for in-house manufacturing of these specialized additives can be extremely expensive and take considerable time to scale up, with no guarantee of success. In contrast, an existing contract manufacturer will already have the personnel, processes, and production equipment in place to create the required additive. Contract manufacturers can quickly begin mass-producing the necessary additive according to client specifications and have the necessary infrastructure to support ongoing production. This infrastructure includes:
Not only do contract manufacturers have the necessary equipment in place to produce fuel and oil additives, they also have the experience. With their extensive production experience covering various products, technical specifications, and tight deadlines, these manufacturers possess valuable insights into the most efficient and cost-effective methods for producing fuel and oil additives.
Contract manufacturers can usually produce chemicals that clients need more quickly and less expensively than clients can in-house. They also typically invest substantially in testing resources and training to ensure that their finished products are of the highest quality.
Developing production, testing, transportation, and storage capacity from the ground up is a major investment. It is not easy to justify such an investment when a firm’s sole chemical needs are fuel and oil additives.
Storage Solutions and Supplier Access
Contract manufacturers also have support infrastructure, such as storage and transportation solutions that clients may not have. Improper storage solutions can ruin raw materials and cost clients considerable time and money. Contract manufacturers are well-versed in how to safely handle, store, and transport raw materials, chemical compounds, and finished products.
Since contract manufacturers also source raw materials, they can often procure them at far lower prices than their client firms. Even after adding in the manufacturer’s markup, clients will usually see cost-savings, due in no small part to the contract manufacturer’s ability to source cheaper raw materials. They also have extensive supplier networks that can provide redundancy in the wake of localized or widespread material shortages.
Production Staff Expertise
Many firms that produce additives and other specialty chemicals in-house rely on generalists who must often spend many of their working hours focused on other tasks. By contrast, a contract manufacturer’s production staff spends most of their time focused solely on producing specialty chemicals. This concentration of effort over time grants them an expertise that client firms typically find difficult, if not impossible, to match. A contract manufacturer’s production team not only develops an expert’s knowledge of chemical combinations, testing, quality assurance, and production techniques but will also stay up-to-date on the best manufacturing practices.
Get Started with Allegheny Contract Manufacturing
If your firm is considering adding fuel and oil additives to your internal maintenance operation or inventory, the first step is understanding what you need. A reputable and experienced contract manufacturer can help you understand the different options available and thoroughly explain each solution’s unique benefits and drawbacks. Allegheny Contract Manufacturing’s seasoned staff is well-versed in various fuel types, engine needs, and additive formulations. We can help you determine what you need to keep your fleet and related equipment functioning optimally or which additives will best serve your client base.