Remanufactured parts are a $7 billion business at retail, which has been growing slowly over the past 30 years as fleets look for reliable, cost-effective alternatives to buying new.
“We see the numbers creeping up a little bit each year,” says Betsy Ballard, director of product development and growth, Detroit Remanufacturing. “It is getting more acceptable to customers. It is a growth industry, and we had our biggest year ever last year.”
But even with this growth, there are some misperceptions about what remanufacturing means and about the quality of reman parts.
Defining the term
Remanufacturers are quick to point out the distinction between remanufacturing and rebuilding.
“There is a misconception that reman is considered a used product or rebuilt one,” says Matt Colwell, business development and strategy manager, Global Aftermarket, Eaton. It isn’t. “When you have a rebuilt product, you may not disassemble the product; you may just be treating the symptom of a particular failure as opposed to really going through to find the root cause of the problem and fixing that,” he says.
Doug Wolma, senior director aftermarket operations at Dana Holding Co., explains one common myth. “The first thing people think is that [reman] is a low-quality alternative. It is a low-cost alternative but it is no longer, if it ever was, a low-quality alternative.”
If reman does not mean used or low quality, what is it?
Henry Foxx, director of remanufactured products at Bendix Commercial Vehicle Systems, explains: “Remanufacturers bring in a core product and tear it down into individual components. Each individual component is inspected to determine if it can be salvaged.” Components that can’t be salvaged are replaced, as are things like gaskets, O-rings and washers.
The Motor & Equipment Remanufacturers Association defines reman this way: “Remanufacturing is a standardized industrial process by which previously sold, worn or nonfunctional products are returned to same-as-new or better condition and performance. The process incorporates technical specifications, including engineering quality and testing standards to field fully warranted products.”
Remanufacturing is much like the original manufacturing process, except some of the components have had a previous life.
However, Gary Troost, vice president and general manager of Valley Truck Parts, an Eaton-authorized rebuilder and parts distributor based in Grand Rapids, Mich., cautions fleets that “not all remanufactured components are created equal.” He says fleets should look for remanufacturers who follow OEM policies, specifications and replacement criteria during the reman process. “Following a process lets you build faster and also have a more consistent product at the end.”
A lot has changed in the remanufacturing business over the years. “Fifty years ago reman was done in small shops by highly skilled artisans,” says Mark Nugent, director, strategic reman new business development at Cummins. “Even though reman today is still done by what I consider highly skilled artisans, it is done in a much larger, more industrialized environment using techniques and technology that were just not possible decades ago.”
Changes to truck components themselves have changed the nature of remanufacturing.
“We are seeing a transition to electronic and mechatronics,” says Tim Bauer, director, remanufacturing, Meritor. “I use the term vehicle electronification. There are more ECUs on trucks and trailers today — whether it’s roll stability, ABS, transmissions controllers, engine controllers — and that is going to continue.”
That presents both challenges and opportunities for remanufacturers. “Instead of repairing a metal component, you are repairing an electronic board and wires, and that takes specialized skills,” Bauer says.
Dave Olsen, CEO of TransAxle, a major remanufacturer in the Atlantic and Northeast, says electronic controls have “made the diagnosis and evaluation of what went wrong with the product more complicated. It is not just gears anymore. It is gears and electronic controls and shift by wire.”
Perhaps the most significant impact of electronic controls is the need to remanufacture the electronic controls themselves. Olsen gave the following example: a transmission might sell for $3,000, “but if you need the controller for it you might pay $1,500 to $2,000 for it new. This is a market screaming for a remanufacturing alternative to drive the cost down.”
Jon Kipper, vice president of business development for Michigan-based Electronics Remanufacturing Co., says his company was started five years ago for that very reason. He says there are not many firms with the capability to remanufacture electronics.
“It requires a different skill set,” he says. Unlike a transmission, which you take apart and examine the parts, “with electronics you have to figure out which pin controls which function without having any intellectual property available to guide you.” He compares this to someone giving you a bicycle and telling you to go to China but not giving you any maps. ERC employs degreed electronic engineers to help with the remanufacturing of electronics.
“The entire remanufacturing environment for electronics is completely different,” Wolma says. “You have to work in an environment that allows you to solder and weld very small components together.” You have to have anti-static floors in the plant so you don’t damage the electronics as you are taking things apart and putting them back together.
While different skills may be needed, Olsen says you fundamentally use the same process. “You have guys in white coats as opposed to blue work. With electronics you have soldering guns in your hand as opposed to wrenches. But, the process — identify the problem, the teardown process, the cleaning process, the subassembly process, the testing process — you go through the same steps. It might be done in a clean room as opposed to a dirtier environment, but you always follow a standard process.”
Why choose reman?
Ballard sees uptime as one of the main drivers of reman. “Fleets want a dependable product and they know that remanufactured products have as good as or better quality than new and in most cases as good a warranty as new. That takes the worry off the fleet. They know if they buy reman it is going to keep them on the road.”
Gary Mead, vice president of maintenance at Tennessee-based fleet U.S. Xpress Enterprises, says one of the reason he chooses reman is that “it lowers our backside acquisition cost of components that we need while keeping us in compliance with reduced stopping distance guidelines.”
Depending on who you talk to, reman components can cost 40% to 60% less than a similar new product. But price alone does not determine Mead’s purchase decision. “We look at quality, then we look at support, and finally we look at the cost. You just don’t always get what you desire for a cheaper price, so that is why we also look at the quality of the reman part too.” Quality is the reasons Mead says U.S. Xpress chooses remanufactured products from original equipment manufacturers.
Another reason some fleets turn to reman is because remanufactured parts fit with sustainability initiatives. “Fleets can feel good about helping the environment as reman parts use 85% less energy to build than new parts and they reduce waste,” Nugent says.
Looking to the future
Remanufacturing is no stranger to the heavy truck industry, and although the types of components that get remanufactured may change, no one believes it is going away.
Colwell believes that since for the first time 98 senators have agreed that global warming is occurring, there is going to be a drive toward a circular economy with more harvesting of used componentry, because it takes less energy to remanufacture products than to manufacture them new.
In fact, some remanufacturers are looking at ways to salvage cores more often. Foxx explains that when a remanufacturer typically gets a core they either machine it or hone it. “What they are doing is taking away material from the original product,” he says. “One question is how do you add material back once the core has gone through the process?”
In order to improve the value proposition of remanufacturing you need to find a way to increase the life of the core, and the way to do that is to add material back, a process called additive manufacturing, he believes. “If you can figure out a way to add material to a core rather than having to find a new core, you increase the value of the existing core and can move from salvaging it once to twice or more.”
Bill Wade, managing partner of Wade & Partners, an aftermarket-consulting firm, sees significant growth for remanufacturing the entire vehicle. Vehicles such as an aluminum-bodied delivery van with diesel power “could be remanufactured to get another half million [miles] out of them and not face that technology wall between the emissions control tiers.”
Wade believes this idea of total vehicle remanufacturing makes a great deal of sense for emergency vehicles, school buses and other municipal vehicles. “It is for sure coming, especially as you look at municipalities that are running out of tax dollars. If their choice is to buy a new fire truck for hundreds of thousands of dollars or remanufacture the old one, put a new suspension on, add new pumps and controllers to the engine, it’s not even close. It makes all the sense in the world.”