AMN: Cloyes is nearing its 100th anniversary. Let’s talk about this milestone the company is approaching and what it means.
John Bohenick: Sure, let me give you a little bit of history. We’re in our 99th year, and it’s kind of unique to have companies that survive that long. In my career, I’ve had the opportunity to work for General Motors, the Gates Corp., SKF, and Dayco, and those were all 100-year companies with strong brands. I knew Cloyes when I was president of Gates North America, because Cloyes sold timing belt kits and timing chain kits. Timing chain kits is the predominant product, and they were a manufacturer and supplier to OE vehicle manufacturers and the automotive aftermarket. Gates also supplied timing belts to Cloyes for aftermarket timing belt kits.
So, I’ve known Cloyes for a long time, and watched its history of being sold by different private equity companies, ending up as a part of American Axle, and then being spun off because American Axle is primarily an OE company, not aftermarket. And through that, juggling between ownerships, I think the business had gotten neglected. So, when the opportunity came up to lead this business, the first person I called was Brian [Editor’s Note: Brian Wheeler, vice president of business development and marketing. The two previously worked together at Dayco.]. Brian and I had big project ahead of us. He said, “You have a brand that’s almost a hundred years old, but it’s been neglected. How do we transform this and re-energize the brand going forward?”
It’s all been about trying to understand: What are the core capacities of Cloyes as a company? How has it found unique ways to deliver value to its customers and get rewarded for that value? Brian has been through projects like this before, and the first step was to really understand what Cloyes was all about. How do we transform technology solutions to make customers more successful and make sure we communicate that message to our employees to remind them why are we unique and why we get rewarded? What are our values? What’s the voice of a Cloyes employee? What makes us different in the market?
During that process, we updated and refreshed our logos, making them a little bit more modern, but not getting too far away from the core of what the logo was. Then we asked, how do we rebuild the strength of the Cloyes brand? Obviously, the fundamentals in the aftermarket are making sure you have the right coverage, making sure you’ve got good quality products. Mechanics make money when they sell labor, so they want confidence that your product will work. Making sure you have the right inventory, good service levels, training, application, documents, and support. But, key thing was the website. So, Brian took on a huge project to redo our website and really make it focused on what the customers want, which is finding their part. Then we focused on getting more aggressive in our engineering to develop new products that all customers need in the market, down to the mechanics who are changing things out. The key was the support we received from our ownership to be able to invest in branding, marketing, website, cataloguing, application, engineering resources. We were able to jump start a good company on the journey to become great.
AMN: Let’s talk about AAPEX 2019. Cloyes won two major awards at the show. How did this feel competing against a lot of big players in the category?
John Bohenick: Again, under Brian’s leadership, we came up with a brand-new booth that sort of re-engineered and re-enthused, re-energized the Cloyes brand message in the market. And one of the solutions we had worked on was for the Ford application where we supply the timing chain kit. One of the main elements of that whole system is the VVT. Customers had to buy it from separate companies, and we re-engineered the VVT so it was better than the OE VVT and also better than the other companies that had re-engineered the product. So, we had a best solution and we launched that product, and we were all pleasantly surprised when the voting of all the buyers in that area in the hard parts category awarded Cloyes for the best new product in the hard parts category.
It’s a great quality solution, and we were thrilled. Brian and I worked at Dayco before, I’ve worked at Gates. We got the award before these much bigger companies. So, it was special for our team to be recognized for a solution that provides real value to our customers. And getting an award or two in the process, makes it special. It was a proud day for Cloyes to see Jason Thompson, our VP R&D, to go up and receive this award. He represented all the Cloyes employees who contributed to this success story. This one was important as a solution to the customers. At the same time, Brian’s led an initiative to get our messaging, advertising and promotions out. Brian, representing Cloyes, won two awards for our marketing efforts and communications in the market. So, a nice enthusiasm builds for us as we continue to improve what Cloyes does in the market.
AMN: You said you got more aggressive in your engineering. Can you explain what you mean?
John Bohenick: Well, we committed more resources, and we also invested in more tools for our engineers to do re-engineering work, from material analysis, to hardness testers, to 3-D scanners, to motoring engine test rig. We gave our engineering group the tools to do complete system testing so we can re-engineer a system. If the OEM system has some weaknesses in the design, we can re-engineer the parts to be better than the OE part and we can validate it. We also focus on new product development and launches as one of our key strategic objectives. And when I say aggressive, it takes a lot from going to identify which products we need in the market, engineering those, re-engineering those, developing the supply base, making sure you follow industry standards of APQP, the ISO 9000 certified process to develop and commercialization new products, PPAP, the quality approval process, developing the right inventory, promoting the product into the market, getting customers to recognize the value, and making sure you have excellent service levels to supply to the customer. So maybe aggressive means being completer and more intense, having the additional resources, and people, and equipment to do a better job faster.
AMN: You mentioned ISO. I understand your Arkansas facility was ISO certified just recently.
John Bohenick: It’s very important to be quality certified, environmental certified, and safety certified. We completed the certification for our manufacturing facility in Paris, Arkansas. Paris was done first because our manufacturing facility also supplies OE components to GM, Mercury Marine and other OE manufacturers. We will proceed to achieve certification for our distribution and engineering facilities in Fort Smith, Arkansas and Aguascalientes, Mexico. I think it’s just good business sense to have best processes in place because quality is important. Not only in OE, but it’s important in the aftermarket.
It’s a big market for timing chain systems and the market will continue to grow as most new engines are equipped with timing chain systems. The increased pressure on improving fuel consumption and reducing emissions as resulted in very complex timing chain systems. These systems require very high engine maintenance such as oil changes to operate as originally designed. For many years I spent working for Gates and Dayco, for example, trying to sell timing belts versus chain, and the message on timing chains was they don’t fail. Now that I lead an aftermarket timing chain company, the timing chains do fail, and they’re very complicated. They used to be three-piece systems, now that can be up to 15 to 20 different components in a kit. And if they’re not maintained very well with people not changing the oil, they fail. So, we’ll be seeing higher failure rates. Installation of the replacement timing chain kit is not a simple task, so we have created many installation videos to help the installer be more successful. Improper installation can lead to an early failure of the replacement system. No matter what, we stand behind our products.
AMN: I also wanted to talk about Mexico. I know the company recently conducted some training initiatives there and it seems to be a market you’re very active in. Can you talk a little bit about that?
John Bohenick: Our team in Mexico not only has responsibility for Mexico, but they’ve also have Latin America, Central America, and South America as a responsibility. It’s our second-biggest market. We have over 35% market share. The challenges there is the car parc is much older than in the US. There’s also a much more diverse population of vehicles in Mexico. One of the areas we found that the installer needs is education on the timing chain failure mode analysis, determining what needs to be repaired, but also the actual process to replace a timing chain system. If you install a new timing chain system incorrectly, it won’t work. So, we spent a lot of time on very complete videos that can be seen through YouTube on how to train mechanics and installers.
We’ve also kicked off with the initiative where we’ve got resources to go out to our different customers and do training seminars. So that’s a big push for us in 2020. Cloyes is the authority on the timing chain systems, and once we teach our mechanics and installers in Mexico, we’ll strengthen the trust they have in us. So, the big shift in Mexico is to significantly increase the resources to provide training to our customers, and ultimately the mechanic or the installer that utilizes our parts to fix their customer’s vehicles.
AMN: Do you have your own in-house trainers, or do you hire trainers locally? How does that work?
John Bohenick: No, we have our own in-house. It’s kind of split between multiple functions, but one of our sales engineers does training. We also have two R&D engineers from time to time do training for bigger groups. It’s all internal. We teach our employees about the systems, we transmit that into a training presentation to make sure we’ve got exactly the right way to train and to teach. And it’s our own employees going out. The best way to learn about your product is to talk to somebody who uses it.
AMN:What else is in the works for Cloyes in the next few years? What will you be your primary areas of focus?
John Bohenick: Well, fundamentally for us, it’s strengthening our core. Our core business is timing chain systems and our core business is in North America, so that’s our primary focus. And what we’ve been doing is trying to enhance our product offerings. For example, adding VVTs to our kits, added solenoids to our kits, adding water pumps to our kits. For a big labor job, you really need to replace the entire timing chain system and ancillary products. If there are other products that have failure rates that are actually higher than the timing chain, you want to be replacing those at the same time with a product you trust from Cloyes.
We continue to expand from a geographic standpoint in Europe, and in Asia, and in South America. We also supply timing belt kits, so we’re looking at expanding that product line in the US. We have a very good design of timing belt kits and components and we fill a need in the North American market. And we are coming up with new ideas on how we can expand to other systems in the engine compartment area. We’ve come up with some new, innovative products that kind of add to when a mechanic is working in the front of the engine, answering the question, what else can they be working on? So those are the areas that we’re focused on to bring to the market in the next few years.
The only thing I would add is for me, and also Brian as well, it’s been an interesting experience, both of us having been at much bigger companies. But the fundamentals of running a good business, the blocking and tackling you need to move the business forward against challenges, they’re there with a small company, you’re just much closer. I’ve always been passionate about technology. I used to run global R&D for Gates, and I’m passionate about being with customers. My goal is to drive to make customers to be more successful. My mission has always been how do I take technology and solutions and deliver it to the customer in a unique way, deliver that value to a customer so the customer rewards you for what you’re doing? And Cloyes has been a nice experience.
When we won the Hard Parts Award, we won against some big companies: Schaeffler, Gates, Dayco, Continental, Bosch. It was a big win for a relatively small company. I describe my personal brand around curiosity, vision and courage. And curiosity, for Brian and other people we brought into the company to strengthen the business, there’s been the curiosity to ask a lot of questions about what’s working and what’s not working as a leadership team, setting the vision about where we’re going, and then making sure it all happens. We have great people at Cloyes, a nice blend of some key resources brought in the strengthen the team and many long-term employees who really are the foundation of the Cloyes brand.
Good stuff happens and bad stuff happens. So, having the courage to deal with those, that’s been a great experience for us. The horrific impacts to life as we know it due to COVID-19 has required all the Cloyes leadership team and all Cloyes employees to be very courageous in our response. We first focused on the health and safety of our employees and then tried to get closer to our customers to make sure we could respond to their needs. Our business has held up well as timing chain failures must be repaired and we are essential to supply the best timing system kits and components as quickly as possible to get vehicle back on the road.
Cloyes has a strong brand and is on a journey to become a great company. I think in a lot of respects, Brian, myself, and other key members of leadership team, we’ve sort of re-energized the brand, re-energized what is that value proposition. And we just see more and more customers rewarding us for what we’re doing to deliver solutions that make them more successful. Cloyes has got an exciting future going forward.