COUNTERFEIT PARTS: A POOR FIT FOR YOUR SHOP

Motor,  Jan 2004  by Nash, Tom

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The problem of bogus automotive parts has not gone away. Armed with advanced technology and cheap labor, counterfeiters are still taking a big bite out of the aftermarket pie. Here's what's being done-and what you can do-to combat the problem.

In 1872, inventor Elijah McCoy patented a lubricating system designed to prevent overheating and seizing on steam engines. His lubricators worked extremely well, saving the shipping lines and railroads lots of money. The success and popularity of McCoy's device soon brought many copies, which cost far less but didn't work nearly as well. These fakes created costly problems for purchasers, who believed they were saving money. Those who wanted to use a genuine product to ensure quality and dependability asked for McCoy's product by name. Thus was born the phrase "the real McCoy."

In the automotive repair industry, there are many options when it comes to buying parts to install on customers' vehicles. The choices range from top-dollar OE replacement parts, to less expensive parts made by reputable parts makers, to cut-rate parts from third-world sources. You can use "the real McCoy" or something more cost-effective, depending on your customer's needs and budget.

The right balance lies in using parts that repair the problem properly, keeping the repair cost as reasonable as possible for the customer, while leaving a margin of profit for the shop. However, there is a line a shop owner or technician should never cross: using poorly made parts that are likely to fail, causing further damage to the vehicle and customer relations.

It's not a new problem. In a December 1932 editorial on replacement parts, MOTOR Editor Neal G. Adair suggested shop owners should "avoid the unknown salesman with an unknown line offered at a low price. Saving in cost will not offset the later expense of satisfying an aggrieved customer."

Far worse is the problem of counterfeit parts. We're talking about flat-out phonies here-absolute junk passed off as genuine name-brand products.

The Problem Is Real

Various trade and enforcement organizations, such as Interpol, the Counterfeit Investigation Bureau in London and the International AntiCounterfeiting Coalition (IACC), are charged with curtailing this illicit trade. Estimates from these groups claim that 6% to 9% of all world trade-nearly $120 billion-is in fakes.

Narrowing the focus, the Automobile Manufacturers Association says counterfeit auto parts is a $12 billion problem globally-$3 billion in the U.S. alone.

In terms of lost jobs, the Dept. of Commerce estimates that the U.S. auto industry could hire over 200,000 more workers if the counterfeit auto parts trade disappeared.

The Dark Side

Counterfeiting has been linked to organized crime throughout the world. Even more appalling is the fact that counterfeiting has been shown to support terrorism. U.S. News & World Report stated that counterfeiting of the Disney animated film The Lion King helped finance a terrorist group with ties to the Irish Republican Army. A counterfeit T-shirt operation funneled money to an Egyptian sheik to help pay for the 1993 attack on the World Trade Center in New York City. In Lebanon, a terrorist group was funded by counterfeiting computer software.

Safety Concerns

Many documented vehicle "accidents" have been caused by counterfeit parts, as well. While bogus spark plugs and other engine parts have merely caused aggravating failures and breakdowns, poorly constructed brake and suspension parts have resulted in many deaths. For example, a number of deaths in Saudi Arabia were attributed to the use of counterfeit brake pads made of compressed wood chips. In Nigeria, brake shoe linings made from compressed grass burst into flames when the brakes were applied. In 1997, seven children died and many others were seriously injured when counterfeit brake pads made of sawdust failed, causing their school bus to overturn. These incidents graphically illustrate the seriousness of the situation when counterfeit parts, made from the cheapest materials, are foisted on an unsuspecting public.

Counterfeiting Affects Us All

Nearly every successful global company has been victimized by counterfeiters. The bigger they are, the bigger target they become. General Motors, through its ACDelco parts division, has been exceptionally hard hit. According to Richard T. Strohm, General Director of Marketing for GM Service and Parts Organization, General Motors, working with authorities, has conducted nearly 500 raids and broken up more than 400 counterfeiting schemes since 1984. More than $180 million in potential fake parts were seized and destroyed.

At the recent Automotive Aftermarket Products Expo (AAPEX) in Las Vegas, Tenneco Automotive, working with AAPEX show officials, successfully stopped four Asian companies from displaying counterfeited products bearing the Clevite Elastomers and/or Harris brands, as well as Tenneco's part numbers and Rubber Manufacturers Association codes.

Victimized companies are not concerned merely with lost revenue, but also with the credibility and integrity of their brands and products. A lack of confidence in their products can cause huge market shifts. Companies must vigorously defend the reputation of their products. Counterfeiting impacts profits, alienates customers who cannot receive warranty coverage on counterfeit goods, raises safety concerns, creates liability issues and affects the distribution chain.