The making of the Lucas Oil empire

@FortuneMagazine February 16, 2012: 2:14 PM ET
Forrest Lucas, founder of Lucas Oil Products:

Forrest Lucas, founder of Lucas Oil Products: "If we can get it made here, we use it."

FORTUNE -- Forrest Lucas, 70, is widely known for his sponsorship of the Indianapolis Colts' Lucas Oil Stadium (home of the 2012 Super Bowl). But few fans know of his journey from long-haul trucker to oil-products producer to race team sponsor. In 1989 he launched Lucas Oil Products, which now sells nearly 200 items in 27 countries. Though Lucas won't reveal his private company's sales or profits, revenue is reportedly around $150 million. He recently sat down with Fortune to share his story.

Home was Columbus, Ind., and both sides of the family were farmers. By the time I was 13, I was showing registered cattle in professional breeder shows. But I always had a fascination for trucks. I'd help my dad with logging, or we'd use a truck when he worked as a mason. Dad had a drinking problem for several years, and I left home when I was 15. I started working for a guy who had a small cattle ranch until I got married at 17.

In 1964, I was 21 when I bought my first semi. It was a 1963 Chevrolet with a 327-cubic-inch gas engine. I started working for Mayflower Moving & Storage, making $13,000 to $14,000 a year, which was a lot of money then. Gas was 25¢ a gallon, and I didn't waste any money. I drove day and night, and ate cheap. I would be moving furniture for company presidents, generals, and admirals, and would study them. All the guys who made it to the top were nice people. So it's part of my philosophy to be nice. I don't have a single rude person working for me.

I thought I'd haul for three years, buy a gas station or some kind of business, and have a family. But after 11 years of marriage, I got divorced. I knew the trucking business really well, so I started buying more trucks and ran my own company.

Back in the 1970s, you needed a license from the government to haul anything. I was a "hot freighter," who'd haul without a license. I was making enough to keep buying trucks. I was the mechanic, manager, and driver. After deregulation of the trucking industry in 1980, I was the first guy in the country to get a full 48-state license with the authority to haul in all 48 states. Most of my freight was coming in and out of California, so I moved to Anaheim in 1986. Back then, California was days away from the rest of the country, and I realized I needed better lubricants for my trucks. I started buying different additives and was studying how to make them. I didn't have a college education, but my practical education gave me an open mind. I tried different things, got a private blender, and started selling an additive to owner-operators at truck stops. After I found a secret ingredient, it sold so well that I had to decide whether to keep the trucking business going or go into the oil business.

When Swift Transportation (SWFT) cut its rates for my best customer to the bone, I decided to sell our eight trucks and go full-time into the oil business. We incorporated as Lucas Oil Products in July 1989 and opened a plant in Corona, Calif., that made our Heavy Duty Oil Stabilizer. Nobody wants to be the first one to try a new product, and I had to figure out what to charge and how to sell it. I sold to truck stops, running cheap ads with a picture of the counter guy so that prospective clients would see people they knew using it. Most of the guys knew I was an ex-trucker myself and would talk about it on the CB.

My second wife, Charlotte, and I went to a lot of trade shows. Charlotte handled the paperwork, and we both worked day and night together. My biggest worry was that the big oil companies would find out what I was doing and cut me out of the business. They had additive companies themselves, but I didn't know that they didn't have my mechanical knowledge. I thought if we could make $28,000 a week, we'd be safe. I developed other oil products, and after four or five years, we were past the safe point. We never had to borrow any money. We put every penny we made back into the company. In 1995 we had enough to buy a new Buick Riviera, and that was the first time we did anything close to luxurious.

We use racecars to get people to look at the product. In the beginning, one of our good customers owned a NAPA Auto Parts store, and his son [Ricky Logan] was a Sprint (S, Fortune 500) car racer. For $500, we painted LUCAS OIL on his car and started marketing through motor racing. In 1998 an old guy I used to work for in Indiana was broke and had a few acres of land. So I bought a few head of registered cattle to give him a job. We later moved the cattle operation to Cross Timbers, Mo., where we have 15,000 acres now. I love the livestock business. We sell a lot of breeding stock.

We built a second plant in Corydon, Ind., in 2003 and had to buy the railroad there [Lucas Rail] in 2006 to get the product out. The town was desperate to make it happen, or it would have lost us and two other factories in town. It's only 13 miles of track, but everything was in good shape. The country was starting to fall apart, and I thought there had to be companies with railroad cars that needed to be parked somewhere, so we turned that into a profit center and got our stuff hauled away.

We started making truck oil for ourselves, and now we do racing oils, boat oils, motorcycle oils, hydraulic oils, plus we have to make different weights because Canada wants this, Mexico wants that. In 2006 we bought a production company that had been making commercials for us. That became Lucas Oil Studios, which produces motor sports and lifestyle programming. I wanted to get involved with TV shows so that I'd have naming rights to the shows and banner rights. We bought a couple of speedways too.

Two years later, when we did our deal with the Indianapolis Colts for the naming rights for Lucas Oil Stadium [paying $122 million over 20 years], the guys said my rise from rags to riches was huge. Growing a company is like raising a child. You don't really notice how much he's grown until someone says you've raised a good kid. Last year we bought MavTV, one of the few independent cable stations left. We're going to make this our big TV channel so that we'll have a place for our programming if any of the other networks decide to drop motor sports. Being the little old do-it-yourselfers we are, no one can take us out that way.

We are already looking 10 to 20 years ahead. For example, we've been working with many race teams, including Chip Ganassi Racing, on light-oil formulas and friction-free greases. We started making synthetic diesel oil for an oil-drilling company in northern Canada and are now selling it to a mining company in the Congo. We're made in America and sold to the world.

You can't compare a large, publicly traded company to Lucas Oil. It's like comparing apples and oranges. Our net numbers may well be better. We don't have board meetings, and I empower my people to go ahead and do things themselves. That means we can make more good choices in a day than many corporate giants.

We've grown right through the recession because people are keeping their cars and trucks longer and are thinking about maintenance. More than 90% of everything in the auto parts industry that is asked for by brand name will be something we make. I'm very proud of that.

My advice

Be honest to a fault. We get lots of deals when a sponsor falls out for a race at the last minute, and people come to us. We don't need to draw up a contract because they know if we give them our word, it's a done deal.

Put your employees first. Before you open a business somewhere, see whether it's a nice environment where people will want to live. See what it will cost your employees to live there because that's going to determine what you have to pay.

Use products made in the U.S. If we can get it made here, we use it. Everything in our oil, additives, and bottles is made in America. We can buy things cheaper elsewhere, but we need to buy things from each other to get out of this economic mess.

Be fair. We treat our vendors like family because we're also a vendor. Ask for a good deal, but don't grind anyone into the ground. Let others make a living too.

This article is from the February 27, 2012 issue of Fortune.  To top of page

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