January 2006, TruckingInfo.com - Cover Story
Counterfeiting, of everything from cigarettes and prescription drugs to car and truck parts, is getting so bad that Congress recently passed the Stop Counterfeiting in Manufactured Goods Act, which at press time was waiting for the President's signature.
The FBI calls counterfeiting "the crime of the 21st century." It's estimated that 5 percent to 8 percent of all goods sold worldwide are counterfeit. While heavy-duty truck parts make up only a small fraction of counterfeit parts overall, the problem appears to be growing.
The problem with counterfeits for the end user is that they're typically poor quality. Someone who's shady enough to try to pass off his parts as someone else's (increasingly including organized crime) probably isn't too interested in making a quality product. In the automotive market, we've seen brake pads made of sawdust or compressed grass that failed or even burst into flames when applied.
Bendix examined one counterfeit valve and found the valve's wall was 56 percent thinner, making it more susceptible to cracking or even rupture. Inconsistent spring tension on the counterfeit valve was likely to result in brake imbalance and longer stopping distances. In addition, O-rings, bolts and pistons used in the counterfeit valve were built with inferior materials that are prone to accelerated wear and leakage.
SKF, which fights an ongoing battle against counterfeit Scotseal seals, says that in lab testing, the bogus parts don't come anywhere near the performance of the real thing.
"We had [counterfeit] seals going out between one and five hours, and ours last for thousands of hours," says Leslie Kern, senior product manager for the heavy-duty market. Not only are you going to have to bring the truck back in to replace seals, she says, but you may end up having to replace oil-soaked brake shoes. And in an extreme case, you could have a wheel come off the truck going down the road.
"In a lot of cases, the quality [issue] is internal," says Randy Petresh, vice president of technical services at Haldex. "The exterior will look essentially flawless and look like a good part, but internally, for instance on pneumatic relay valves, some of the internal passages will be blocked solid. They don't work; they just don't work."
Not only do you end up with an inferior part that's likely to fail early (if it works at all), but also, when you buy a counterfeit part, you also lose the benefit of warranty protection. You may think you got a great deal on a Haldex part, but when it fails and you submit it to Haldex for a warranty claim, you're out of luck.
The parts industry has mobilized in recent years to fight counterfeiting as companies try to protect their brand names, goodwill and profits and keep unsafe parts out of the marketplace. The Motor & Equipment Manufacturers Association has set up a Brand Protection Council to help address and set the association's priorities in the areas of counterfeiting, diversion, noncompliant products and intellectual property rights. It includes heavy-duty companies such as ArvinMeritor, Bendix, SKF, Cummins, Grote, Haldex, Horton and Webb.
The counterfeiting law just passed will give federal law enforcement officials the authority to seize and destroy not only counterfeit goods, but also the tools, dies, machinery and equipment used to produce, package and traffic the fake goods.
The bill also strengthens enforcement by making it a crime to knowingly produce labels or packaging used to sell counterfeit goods. Prior to this bill, authorities could confiscate the fake parts, but not the stuff used to make and distribute them, leaving the counterfeiters the ability to make more parts.
FINDING THE BAD APPLES
It's easy to say, "Counterfeit parts bad, OEM parts good." But in real life, there's a whole range of aftermarket parts filling the spectrum in between original parts and out-and-out counterfeits. Figuring out what's what, and what you should use in your trucks, isn't easy.
"It's a very complex question because of the different channels that serve the marketplace," says Steve Crowley, president of the parts-distribution group. A parts manufacturer may provide OEM parts, sell those same parts in the aftermarket through parts distributors under their own name, and also provide those parts to be sold under a private label. Some of these parts may actually have been outsourced to factories overseas. Truck manufacturers not only sell OE parts, but also offer "all-makes" programs, with private-label parts for other trucks as well as their own.
There are legal aftermarket replacement parts at all quality levels. Adding to the confusion are parts manufacturers who market several different quality levels of their product. And, of course, there are the counterfeits.
Legally, counterfeiting is "trafficking in goods featuring a mark substantially the same as someone else's in a manner likely to cause confusion," according to Sharon Barner, an intellectual property expert with the law firm of Foley & Lardner.
Obviously, if a company tries to sell a part with another company's brand name on the part or the box, that's counterfeiting. But courts have also ruled that using things such as a distinctive color, deceptive packaging and unique parts numbering system can also make a product a counterfeit.
For instance, SKF/Chicago Rawhide seals have a distinctive green color as well as a unique parts numbering system. The company often sees substandard seals that, while they don't have the brand name on them, mimic the distinctive green color and parts numbering.
Courts have declared that the two used together constitute counterfeiting, even though the brand name isn't used. "When they use the two together," says Kern, "those two things put together in the customer's mind equal Chicago Rawhide or SKF, and that's misrepresenting the product."
Counterfeiters even beat SKF to the marketplace with an imitation of their newest packaging, she says. "The box doesn't say SKF or Chicago Rawhide, but it has the same type of color scheme and picture on there."
So that's the legal definition of a counterfeit. But when you talk to OEM suppliers about the issue of counterfeit parts, many of them lump in lesser-quality replacement parts, which they may call clones, knock-offs or will-fits. Some are reverse-engineered, which is legal, but may not lead to a quality or even a working part.
Companies say it's not uncommon to get parts sent back for a warranty claim that don't have the company name on them, but the part was similar enough in other aspects to cause confusion.
"This is more prevalent in the marketplace than counterfeit," says Dave Schultz, marketing manager for pneumatic control systems at Bendix. "A lot of times people will think they're getting the genuine Bendix product because it's sold under the exact same parts number, and the clones are also using our alphanumeric product designation, so there is a level of confusion."
One similarity often cited as confusing to customers is using the same parts number. But Wayne Stockseth, president of Parts Distributing Co., the wholesale division of FleetPride, defends the practice. "I know some manufacturers who have tried to legally stop people from putting a cross-reference [part] number on the box," he says. "If we eliminate cross-reference, we will shut down the [aftermarket parts] industry."
Art Dilger, Bendix's director of pneumatic control systems, agrees that "there certainly are situations where you have the [parts] that are not violating any legal intellectual property laws. In those cases what we try to do is advise the customer to understand the pitfalls of not buying genuine. How good is the will-fit part, and what percentage of the time are you willing to risk your air brake system on the will-fit?"
Pat Biermann, president of HD America, a marketing group of about 500 aftermarket distributor locations in North America, says his group is frequently approached by people who "try and sell us 'same as this, same as that.' " Most of the time the price is considerably less, he says – and so is the quality. "They say this is a direct replacement for this slack adjuster or seal, that it's the exact same thing, but when you tear into a lot of them, they're not.
A ROSE BY ANY OTHER NAME
But reputable companies that make their living selling parts in the aftermarket say there are plenty of replacement parts out there that are high quality, but not OEM original – and definitely not counterfeits. These replacement parts often offer a truck owner a lower-cost alternative than the "genuine" OE parts.
"I just don't think there's a lot of inferior quality, dangerous parts out there," Stockseth says. "I think it's a case of everyone trying to protect their turf."
Stockseth compares replacement parts to generic over-the-counter drugs. "You can walk into Walgreen's and pick up Walgreen's replacement for Tylenol – acetaminophen," he says.
There's no consistent terminology used to refer to aftermarket replacement parts. Some OEs will call anything that's not their own "counterfeit." Others use the term "will-fit," but that's often considered derogatory. "Generic" and "alternative" are more neutral terms.
Then there are what some people call "OEM equivalent" or "original equipment service" parts.
"With an OEM part, obviously you go through the dealer network, and you're buying the same part that came off the truck the first time," says Petresh. "There are other parts manufacturing companies that make replacement parts, but they build them under license or some type of contractual relationship to OEM specifications and requirements."
Chris Greeson, senior technical service manager at Wix Filters, explains it this way: "We build air filters for Ford Motor Co. – that's the OE part – then we build the Motorcraft brand of that part number also; that's called an original equipment service part."
Companies such as Paccar, Freightliner and International have their own private label "brand" of parts for their own trucks as well as other makes. These are often made for them by the same manufacturers that are making the OEM parts on the trucks.
For example, for International's Fleetrite private label, suppliers work with the OEM's engineering staff to make sure the parts meet manufacturer specifications, explains Brian Mulshine, manager of service development and marketing.
Aftermarket companies and marketing groups such as FleetPride and HD America have their own private labels, as well.
HD America's Biermann says of its Top Choice label, "The product we put in those boxes came from the suppliers – the same suppliers that we do business with – name brands. We're very particular and careful that anything that goes into that private brand is from reputable suppliers. We're kind of like a NAPA, but we're in the heavy truck parts business." Inside the box, he says the part itself is often identified with the actual manufacturer's brand name.
At VIPAR Heavy Duty, its private label brakes are made by two of the largest brake suppliers in the United States, Crowley says. "We put it on the box. On our Medallion brake line, it says 'a product of Carlisle Motion Control.' "
Beyond private label, Crowley points out that there are high-quality replacement parts available from recognizable brand names that you won't find on a new truck or trailer you buy from the factory, such as Euclid (owned by ArvinMeritor) and Baldwin. "They don't have a presence on a vehicle, but they have a high recognition brand for an aftermarket part." (In fact, he says, these parts makers have to fight counterfeiters who try to make cheap copies of their products, too.)
Another source of quality alternative replacement parts, Stockseth says, are small manufacturers who used to be a supplier to a truck or trailer manufacturer. As an example, he cites an injection molding company that was making hubcaps for a major trailer manufacturer. When the plastics guy and the trailer maker parted ways, Stockseth asked him to make the same hubcaps (which were not under any patent) for PDC to market as an aftermarket replacement part.
HD America's Biermann acknowledges that there are cases where a factory that made parts for an OEM or component maker has a contract that has expired on a non-patented product, so the factory can now sell those replacement parts, and it is indeed the exact same thing.
"But the only way to know that is to do the testing and make sure that it is."
Crowley adds that although there are a lot of counterfeits coming into this country from Southeast Asia, there are legitimate replacement parts being offered from offshore, as well.
"We see stuff from a lot of places along the Pacific Rim. You can end up with parts that would be suspect," he says. "But you also see some good quality products coming out of those areas. As long as they're represented as what they are – a will-fit alternative at a low price – then the buyer can make that decision. If you want to buy a Chinese brake drum at a reasonable price, we have that – but it's not represented as anything but that. They have their own parts numbering system, with an interchange code to all the other guys. They're not one of these guys that says 'it's the same as.' I think that's a subtle difference, but a big one."
Whatever the source, International's Mulshine says there's a drawback to using generic aftermarket replacement parts. "If you're replacing because of a failure, there are many parts where the vendors learn a lot from the failures, and make improvements to the product. These will-fit manufacturers do not have the knowledge or experience of the product improvements that are happening; they don't have the direct ties to the vehicle manufacturer or higher tier of engineering [expertise]. If you're doing will-fit, you're losing all those layers of experience and history that [they] might not be designing into your product."
The surest way to protect yourself from counterfeit or substandard will-fit parts is to buy genuine OEM parts from the dealer or a reputable supplier. But in the real world, there's a balance between that ideal and the desire to save on maintenance costs.
It's often hard to tell a counterfeit part from the original. "These counterfeiters will even copy the most remote defect on the part," says Haldex's Petresh. "They'll produce everything the way they see it. In a lot of cases they're dead ringers; [it's] very difficult to tell them apart."
In fact, a competition run by a security supplier at the Automotive Aftermarket Products Expo in Las Vegas last November found that fewer than 16 percent of the entrants – self-professed experts – could tell genuine parts from counterfeit ones.
There are, however, some things you can look for to avoid counterfeit or poor-quality knock-offs.
Beware of parts with no identifying information on them. "Often times they're packaged in nicely designed packages, but when you pull the part out, they tend to not have any identification of who the supplier is," says Brad Van Riper, vice president of research and development at Truck-Lite. "They're hoping that the unsuspecting customer will buy the product at the truckstop or aftermarket distributor, remove it and install it, and if there is a problem, whether it's a premature failure or a noncompliance issue, you won't have any traceability."
"If someone says they're selling you a Bendix valve or a Baldwin filter, and that name is not on the part, you should be concerned," says HD America's Biermann.
If a part seems suspect, check with the supposed manufacturer for telltale signs. For instance, on counterfeit Scotseals, you may be able to scratch off the distinctive green color with your fingernail. On the real thing, the green is a protective coating designed to seal any imperfections – on counterfeits, it's just paint.
Beware of products that are ridiculous bargains. "If you normally spend $50 for a part and you find someone willing to sell it to you for $20, that's a dead giveaway that something stinks," says Haldex's Petresh. "Nobody gives you something for nothing."
Because you can't know the quality of a part just by looking at it – and some counterfeiters are sneaky enough to charge a price that doesn't cause suspicion – who you're buying from is key.
"To me, the replacement or alternative parts business is a self-policing thing," Stockseth says. "Most of the independent [parts distributors] out there are not going to sell something of inferior quality. We all want continuing business, and you can't get continuing business if you sell stuff that is not equal in quality to the 'genuine' product."
Stockseth tells the story of some seven-way trailer cable he declined to carry. "Like most other people, we had them send us some samples, and it was obvious as soon as we stripped the wire off that [the reason it cost so much less was] they had cut down on the amount of copper."
Obviously, somebody's selling this junk, since it keeps making its way back to manufacturers for warranty claims. "There's somebody in every market willing to take a little chance doing that," Crowley says.
When it comes to choosing replacement parts for your vehicles, there are lots of choices. Make sure yours is an informed one.