Every other week, aftermarketNews.com offers an interview with a high-profile individual in the automotive aftermarket. We give executives free rein to express their views on anything from the state of their corporations to recent legislative news to future trends in their niche markets. Here you see what matters to the newsmakers themselves.
Our latest edition of “Executive Interview” features Tony Perticari, a 35-year veteran of the automotive parts industry. Perticari joined Philadelphia-based Crown Remanufacturing in 1986. He currently serves as vice president of sales and marketing for the company and is responsible for all NAFTA and overseas sales and marketing activities.
Perticari began his career in the automotive industry in 1969 with Sunoil. As a motor products representative, he was responsible for leasing, training and administrating full-service service stations in Southeastern New Jersey. In 1973, he accepted a position with the Robert Bosch Corp. During his 13 years with the company, he held various positions including territory representative, district manager, zone manager and national accounts manager.
He is a member of the Auto International Association (a segment of AAIA) board of directors, Automotive Sales Council, Automobile Communications Council and the Automotive Parts Rebuilders Association. In 1999, he was honored by AIA with a “Lifetime Achievement Award” and was recognized as its “Person of the Year” in 2002.
Crown Remanufacturing is a major remanufacturer of automotive parts. Established in 1973, the company has evolved from a small, single line rebuilder to become one of the nation’s leading auto parts remanufacturers in the U.S.
The company continues to focus its efforts on developing and implementing the re-engineering techniques and advanced manufacturing technologies that will be needed for tomorrow’s vehicle systems and electronic components.
Join us as Tony Perticari tells us what makes Crown tick, and what it takes to stay ahead of the pack. He also shares with us his predictions for the future of the reman industry, and the company.
Q: What single factor makes Crown different than most remanufacturers?
A: At Crown, we go beyond remanufacturing. Before we put a part back in service, we reengineer it so it’s actually better than original. We adopted this philosophy from the beginning and we’ve stayed on the forefront of technology.
In the electronics area, for example, our engineers can take components designed with yesterday’s electronics and remanufacture them using latest circuitry and construction techniques, creating replacement components that perform better and last longer than the original ones.
With most of the offshore suppliers, what they supply is exactly the way it was designed originally by the OEs. But sometimes, the OE design has an inherent flaw. When we recognize it, we have the ability to re-engineer it out, probably across the line. When an OE design has a problem, you could keep replacing a distributor in a car every six months. Somewhere down the line, the customer will lose his patience; the manufacturer isn’t going to cover you for the labor you’ve expended. So by fixing the part, rather than just replacing it, we’ve taken it one step further. This gives our customers the ultimate value. They get the higher reliability and performance of today’s technology at the lower cost of a remanufactured part.
Another area that separates us from the competition is that we’ve developed our own proprietary test equipment to simulate on-car conditions, implemented advanced manufacturing techniques and established stringent testing procedures to ensure the highest and most consistent level of quality possible.
Q: The remanufacturing business has seen quite a few mergers and acquisitions recently. As an independent supplier, what is Crown doing to stay competitive and still thrive in this marketplace?
A: Crown has the advantage of operating more like an OEM than a typical remanufacturer. We employ best-practice production methods such as cell manufacturing, just-in-time-inventory and advanced machining equipment to keep our costs lean without impacting product availability. This allows us to offer broad coverage and exceptional quality at competitive pricing, while effectively meeting the needs of both large and small customers.
We try to incorporate lean concepts in every product line we do, to keep the cost down, but the value and quality high. That, of course allows us to be really competitive in our pricing.
Q: How has the influx of offshore remanufactured parts affected Crown and what is the company doing to combat it?
A lot of the products that come in are short-lines. For instance, Crown offers about 685 SKUs in our distributor line alone. What you see coming in from overseas may be 12 SKUs. That is it. You get no backup of service, no backup of quality assurance. You don’t even know where it really came from. There’s no warranty protection, no labor protection. No co-op. So it’s not a program that they offer. They are offering short lines at low prices and skimming the cream off the top with no regard for distribution.
We offer our customers what they can never get from off shore. Namely, a complete program from an established experienced and stable supplier with more than 30 years of remanufacturing experience. We give them OE quality, full coverage and availability, domestic and import applications, complete warranty, co-op programs, accurate cataloging, technical assistance and first-rate customer service. At Crown, we deliver more than just parts. We deliver the quality and value our customers need to sell and install Crown products with confidence.
Q: With regard to the cost competitiveness of offshore parts, do you find that the remanufacturing sector has to re-market itself in order to stay competitive?
A: Yes. What we have to do is go to our customer base and tell them of all the other features that Crown can provide that these offshore suppliers cannot. All it takes is one time for these people to get hit with a substantial labor claim or some other type of situation where there is no backup from these offshore suppliers and they will know right away that they made a mistake. While they think they have saved $20 or $30, it could cost them ten times as much if they have serious issues. After that, you realize, it’s not such a good deal after all.
One of the things that we have planned for this year is a marketing and advertising campaign targeting this very issue – telling professional technicians that if you are going to rely on remanufactured parts you should make sure that the company that provides them is there to support you, and has provided you with an accurate part, accurate cataloging, as well as proper fit, quality and reliability. We saw this as one way to combat this particular issue.
We’ve been here 30 years. Our longevity helps us in many ways. We’ve developed a good track record of consistency whereas these people come and go. Again, you are taking your chances dealing with some of these people. Not that all of them are bad, but you have no way of knowing.
Q: Where does Crown see future opportunities?
A: We feel engine electronics and fuel management are two areas that we will pursue. Getting into these more sophisticated, complex areas precludes anyone from just coming along with no experience, no technology, and no investment. It takes a little more sophistication and intelligence, a little more brainpower to get into some of these arenas. We’re already working in these areas through the electronic ignition programs. We’re just going to push further in this area to try and mine more of that business.
We plan to stay on the cutting edge of remanufacturing technology and will focus more of our energies on engine electronics and fuel management. Traditionally remanufactured parts are still our bread and butter, but the real growth opportunities are in vehicle electronics. These products require a higher level of sophistication and capabilities and we have both the engineering staff and the equipment to get the job done right.
Q: Within the automotive industry, remanufacturers are leaders when it comes to meeting environmental standards. What kind of standards does Crown keep to? Is Crown ISO/QS certified?
A: In Philadelphia, you have to be very strict with your OSHA and EPA standards because of the environment that we live in here. We have to adhere to that, and we do, 110 percent. We actually have people on our staff, whose job it is to make sure that we comply. We have compliance officers who make sure that every area is very tightly controlled. We try not to use a lot of hazardous waste — we try to use environmentally friendly chemicals.
We’re not certified ISO or QS, but we function using ISO/QS principles. We’ve seriously considered pursuing it but realized that the money that you expend to get the approval of a process could be better spent in product development. You can actually certify a bad process. So in that respect, we feel like we’re meeting the expectations. All we have to do is call someone in and have them certify it for about a quarter of a million dollars. Right now, we’d rather spent a quarter million some other way. However, this may change in the future.
Q: Usage rates for remanufactured parts have gone down in the last couple of years. Is this a concern for Crown?
A: We see the influx of new replacement in the aftermarket, from domestic sources as well as offshore, as an obvious concern, but as I said before we do feel there are certain areas that will be strong for remanufacturers. Granted, you will see some things on which the prices have dropped dramatically — such as CV axles and some other specific products where the price points have gotten very low. Of course that does concern us, but it just makes us work that much harder on becoming more of a lean operation, and stay as competitive as possible. Going forward with the electronics and fuel management arena, we feel that if we maintain our edge with technology, and continue to offer a good quality product, a fair price, with a wrap around program with all the things we offer to WDs, we’ll be ok.
Q: What do you foresee for the future of the reman industry in general?
A: I think in the coming years, remanufacturers in particular, are really going to have to take stock of their costs, and look at the way they produce things. There’s no question — with longer warranties and better made vehicles, it’s going to stretch out the span of time before aftermarket parts are needed. This will probably change our mix of customers and products. I think things that we sell between the age brackets of five to nine years, could go to eight to 15 years. But as long as you can bring to the market a product for an after-warranty vehicle, that is well priced compared to a new part, there will always be an opportunity.
Q: What needs to be done to better promote the use of remanufactured parts with technicians, and maybe even consumers?
A: If you look at certain product categories it would be very hard to find a new part. It would be hard to find a new transmission, or engine or radiator. These markets have developed for remanufacturers because they bring value to the aftermarket and the consumer. As a group, remanufacturers need to stress the fact that we do give quality. We offer tremendous services. We do have extremely competitive prices, and offer a wide coverage of products. The availability is excellent. We need to promote the industry to the consumer so that when they do go look for replacement parts, reman is the obvious choice. But you’ve got to bring the quality to the house, so that when they do buy, they realize this is the way to go. The technician has to have that confidence so that he can turn to his customer and say ‘your alternator is going, I can get you a reman one for $150 or a new one for $450.’
We try to stay true to the fit, form and function of the OE. We don’t try to over-consolidate or redesign it so that it looks so radical from the way it was initially designed so that when an installer gets it, it takes them forever to try and figure out how to put it on. We try to make it as simple as possible for them.
Click here to view the rest of today’s headlines.