What’s in a Name?

| December 12, 2008

When speaking of replacement parts, original equipment manufacturers say the word “copycat” with a sneer – or a shudder. To Anthony DeFeo, it’s a compliment.

“We’re making a carbon copy of the product,” says DeFeo, vice president of DeFeo Manufacturing in Mount Kisco, N.Y., which makes replacement parts for Allison transmissions. Non-OEM parts can cost as little as 20 percent of the OEM price, DeFeo says, mainly because the OEM passes on to customers production costs and the cost of years of research and development – costs that the generic manufacturer doesn’t have.

Non-OEM parts are popular because the economy has forced owner-operators to be more cost-conscious, says Mark Williams, services manager for vehicle maintenance reporting standards at the Technology and Maintenance Council. Nevertheless, he likes to quote the old FRAM oil filter commercial: “Pay a little more now or pay a lot later.”

“The OEM part has been tested for stress, fatigue, torque, you name it, and has a solid warranty policy backing it up,” says Williams, who worked at Volvo for 22 years before joining TMC. “If you buy a knockoff part, you are running a risk.” If the part’s no good, Williams asks, who will help you “when you break down in Nevada?” Do you want an authorized OEM service bay working on your truck or “some shade-tree operation?”

Short-term savings, or long-term investment? Once the initial warranty coverage expires, that’s the choice owner-operators face when buying replacement parts – especially for crucial components such as engines, drivetrains and wheel systems. The businesses competing for the aftermarket dollar include the truck maker and its dealer chain; rival truck makers; the manufacturers that made the factory-installed part in the first place; and rival “will-fit” parts manufacturers who seek to duplicate those factory-installed parts. Even outright counterfeiters have elbowed into the game, illegally stamping brand names onto shoddy goods. In an increasingly crowded aftermarket, the savvy owner-operator weighs costs, warranties, reputations and risks and places his money only where he’s willing to place his trust as well.

At a pharmacy, DeFeo argues, owner-operators have no qualms about buying cheaper generic drugs the moment they become available. “Ours is a generic part, just like the generic drug.”

The difference, says Nick Richards – spokesman for GM Powertrain, which makes Allison transmissions – is that drug manufacturers, being strictly regulated, must share their formulas when the patents expire. In the parts industry, on the other hand, “there are no controls in place to assure the consumer that he is getting a comparable product,” Richards says.

“We have found lots of reasons not to go generic,” agrees Vicky Black of Dana Commercial Vehicle Systems, maker of heavy-duty Spicer axles, brakes and driveshafts. “We run test after test, and if you look at the total life cycle of that product, there’s really no comparison. With Dana, you get the full deal – service and technical expertise.”

HDA Parts Network, which includes more than 500 independent parts warehouses, spurns “no-name knockoff parts,” says Pat Biermann, HDA president. “We don’t do business with people like that. Sure, prudent owner-operators are interested in price, but eventually they have to ask themselves, how much would it cost me to replace this part four or five times?”

OEM and non-OEM parts may look alike, but differences in quality might not be apparent, says Tim Kraus, executive director of the Heavy Duty Manufacturers Association. Whether you buy OEM or non-OEM, you always want parts made to OEM specifications, he says. “And on critical parts, it’s probably not a good idea to go beyond the original manufacturer.”

When considering the cost of a part, owner-operators should compare not just initial price tags but lifetime “cost of ownership,” says Richard Andrews, president of Stemco, based in Longview, Texas, which makes wheel-end systems that are standard on Mack and Volvo. “How much will the part cost to maintain? How many times will it have to be replaced? How much downtime do you expect?”

Copycat products don’t meet Stemco standards of design and durability, “and where are they when service is required?” Andrews asks. Stemco has its own engineering test lab and active R&D program, as well as a service organization across North America that helps with installation, maintenance and repair, Andrews says.

Engineering niceties such as micron level precision can be “a hard sell to truck drivers trying to make ends meet,” concedes Don Mahrt, manager of on-highway engine parts support for Caterpillar. “But they need to educate themselves to find out exactly what they’re buying. A part isn’t just a part. It’s not just a single rod, bearing or piston. It’s a system. It’s all calibrated to work together as a single unit.”

Reverse engineering, on the other hand, is imprecise, slow and inefficient, Mahrt says. Even if the non-OEM eventually comes up with an exact duplicate, Caterpillar already has done two or three upgrades by then, because Caterpillar continuously improves its parts, Mahrt says.

Among non-OEM parts, even high efficiency can be a problem. “There are filters on the market that actually work too well,” says Richards. “They can trap particles that are not harmful to the transmission, yet reach capacity too quickly, causing lubrication failures.”

DeFeo says his non-OEM products can compete with anyone’s. “In terms of quality, our parts are identical,” he says. Indeed, he says, some authorized Allison remanufacturers buy DeFeo parts, which are good enough to run a lot of government fleets, including transit fleets in New York and New Jersey, “and those are top-of-the-line standards,” DeFeo says. Sales overall – to distributors, fleets, even OEM dealers – are so good the company is scouting locations for a factory expansion, DeFeo says. “We reverse-engineer anything we feel we can save the customer money on.”

The OEM/non-OEM question isn’t as clear-cut as many think, industry experts say. In some cases, for example, the off-brand part really is the same as the branded one, Kraus says. “The non-OEMs didn’t win the bid to build the original design, but they have the original specs and can duplicate them for the aftermarket.”

Often, the OEM designs the equipment, “but the parts are contracted out to companies like us,” DeFeo says. “In return, the OEM demands exclusivity for a certain number of years, depending on the part – as little as five years, as much as 30 years. Once that period is over, the contractor is free to sell its own version on the aftermarket.”

Many OEM parts makers sell under their own brands to the aftermarket as well. For example, aftermarket sales are about 50 percent of Dana’s business and 70 percent of Stemco’s. “Our aftermarket parts are made to the same standard as OEM parts,” Andrews says.

Dana’s aftermarket sales force is always happy to woo drivers away from rival brands, even ones that are standard OEM equipment, Black says.

In addition, some OEM parts makers sell to more than one OEM. “A Stemco in a Volvo box is the same as a Stemco in a Freightliner box,” Williams says. “If they fit, they fit.”

To further confuse the issue, OEMs sell parts to customers of rival OEMs. Volvo’s website, for example, says: “No matter what make of truck you drive, we’ve got your parts!”

The trend toward interchangeable parts is unsurprising, given federal emissions regulations that are pushing the OEMs into a “vanilla sameness of design,” Williams says.

Another sign of this trend is the Motor Vehicle Owner’s Right To Repair Act, which would require OEMs to release to the aftermarket the same technical information they provide their own dealerships. Strongly opposed by OEMs, the legislation has more than 100 sponsors in both houses of Congress and the support of many powerful lobbies, including AAA, Consumers Union, Public Citizen and the National Federation of Independent Business, plus the heavy-duty Service Specialists Association.

OEM dealers and distributors who need parts for high-demand or discontinued equipment often have no choice but to turn to non-OEM manufacturers, DeFeo says.

Many dealerships offer less expensive non-OEM parts as options, but that choice can have unforeseen consequences, Williams says. “If all you want is my cheapest price, I’m not going to be able to offer you the highest level of service.”

As manufacturing technology continues to improve, reverse-engineered or copycat products will become more common, Richards says. “The issue is still one of quality and value. The loss of revenue from a non-working vehicle is far greater than the cost savings on a copycat product.”

Knockoff mechanical parts are a growing problem, says Mahrt, who notes that Caterpillar, like other OEMs, has seen lots of former employees go to work for rival companies.

“Caterpillar clearly has an edge on electronic parts – for now, anyway,” Mahrt says. “We’re lulling ourselves to sleep if we think the competition will never have that capability, but they don’t have it now. We’re the big dog on the block, so we’ve got a big target on our back. It’s a perverse sort of compliment.”


AFTERMARKET SHOPPING TIPS
READ THE WARRANTY. In almost every instance, using unauthorized parts voids warranties. Even if the warranty has expired, using unauthorized parts poses risks to your business, says Nick Richards of GM Powertrain. “Warranty use is only the beginning of the life cycle of the vehicle.”

CHECK ASSOCIATES AND CREDENTIALS. “Buy through a reputable, nationally known or nationally identified truck parts distributor,” says Tim Kraus of the Heavy Duty Manufacturers Association. Retail chains such as Fleetpride or Truckpro, any manufacturer affiliated with the Council of Fleet Specialists, any distributor in the HDA Parts Network – all pledge replacement parts that meet OEM specifications, whether those parts have OEM brands or not, Kraus says.

FOLLOW THE OEM. Even if you’re not buying the part from the OEM, you have the option of sticking with parts makers that supply the OEMs. “Manufacturers don’t say, ‘OK, we’re done making the OEM parts, now it’s time to dial down on our quality for the aftermarket.’ It’s the same part,” says Mark Williams of the Technology and Maintenance Council.

ASK ABOUT REMANS. If the price of a new OEM part is giving you sticker shock, ask the OEM about the price of its remanufactured version, says Don Mahrt of Caterpillar. “They typically cost 40 percent less than new, but they’re just as good as new,” and they offer all the benefits of staying within the OEM system, he says.

STAY COOL IN AN EMERGENCY. Call the parts dealer you know and trust, no matter where you’re broken down, Kraus says. That dealer can recommend someone just as trustworthy in your vicinity. And don’t lower your standards just because your load is sitting still. The goal should not be finding cut-rate parts or cutting downtime by a few hours, but “a quality repair job at a fair price,” Kraus says.

ONE SIZE DOESN’T ALWAYS FIT ALL. If you opt for generic equipment unsuited to your application, don’t complain when it fails, Williams says.

EXPECT TO GET WHAT YOU PAY FOR. If you’re buying a part with an unfamiliar brand at a cheap price, don’t be surprised if it has a short life.


BEWARE OF COUNTERFEITS
Just beginning to crop up in the replacement market are illegally counterfeited parts from overseas that clumsily attempt to mimic genuine parts – generally brake systems, so far – down to the brand names and packaging.

The International Anti-Counterfeiting Coalition, based in Washington, D.C., lists these warning signs of counterfeit goods:

  • Packaging with blurred or misspelled words.

  • No manufacturer’s contact information or part code number.
  • No trademark or copyright insignia or language.
  • Strangely low prices.

Most important, experts say, is to buy parts only from reputable dealers, whether OEMs or independents. If someone’s selling parts from the back of a trailer in a vacant lot, think twice before buying.


BUYING OEM PARTS – BUT NOT FROM OEMS
Even those who swear by branded parts don’t always buy them from OEMs. Some seek a better deal from independent parts dealers and distributors, such as NAPA Truck Service Centers or the 500-plus warehouses represented by HDA Parts Network.

“If the owner-operator wants to look around and shop around for parts, he’s got a lot of options,” says Pat Biermann, HDA president. “We can offer the same thing they get from the OEM, and usually at a much better price.”

HDA has its own nationwide warranty program, Biermann says. “If you buy from an HDA distributor, we stand behind it and will replace it. If you buy the part and are not happy, we will get you a new part. If the part was purchased in Miami, and a problem is encountered in Los Angeles, the distributor in Los Angeles gets the new part.”

Independent parts dealers have become an important part of the industry, says Vicky Black of Dana. Sticking with OEM parts and service while the truck is under warranty is “an easy choice – no choice, really,” but once the warranty expires, the owner-operator is free to decide where he’ll get the best price and best service, Black says.

The independent parts dealer has more incentive to do a good job because he doesn’t have truck sales to fall back on, Biermann says. “He’s got only one thing to sell, and that’s parts.”

The OEMs took the aftermarket for granted too long, while the independent parts distributors aggressively pursued it, says Mark Williams of the Technology and Maintenance Council. Still, he says, owner-operators shouldn’t be too hasty to jilt their OEM dealers for a sexy aftermarket deal.

“What you lose in that knockoff transaction is the service and support that the OEM would like to provide you as a customer,” Williams says. “Maybe you save $15, but you lose that right of access.”

Don Mahrt of Caterpillar points out that engine work done at an authorized repair shop is recorded in the national Caterpillar database. “So we’re able to follow the repair history. That means we can diagnose the problems more quickly and accurately,” he says.

Also, the owner-operator benefits over the long run by getting more personal attention if he maintains a close relationship with his OEM dealer throughout the life of the truck, not just until the warranties run out, Williams says.

“Too many owner-operators walk into the dealership with a chip on their shoulders because they think they’re going to get ripped off,” Williams says. “The owner-operator needs to establish a valued relationship with his dealer – with the parts buyer, with the shop foreman, with the service manager. You don’t develop those relationships in the middle of a repair. You need to build a history.”

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