WASHINGTON, DC — At MEMA’s recent Legislative Summit, congressional representatives discussed aftermarket issues with the association’s members. Counterman Managing Editor Michael Freeze spoke with a number of industry execs at the event, and asked: As an attendee at the MEMA Legislative Summit, what industry issue do you feel most passionate about?
Frank Loftus, General Manager; 3M Automotive:
“One issue that impacts automobile manufacturers is intellectual property protection. In our case, 3M invested a lot of money into its research and development. Our plan is to vigorously protect intellectual property. In some countries, we see that the respect for intellectual property is just not there. For us, this is our number-one issue.”
Al Stecklein, Group President, Global Aftermarket Division; Gates Corp:
“There are many important issues that we need to focus on. The price of raw materials is escalating and it’s getting harder to pass the costs along. Also, over the long term, rising health care costs is a concern. We all have lots of employees and we are obligated to give them some type of medical coverage. Medical costs have gone up more than wages. It’s a problem for our employees.”
Dennis Welvaert, President, North American Aftermarket Division, Dayco:
“I’m passionate about raw material costs. They’re just going through the roof. Our products are rubber-based, but other companies deal with domestic steel and aluminum. Aluminum, for instance, went from 80 cents per pound to $1.20 per pound, a 50 percent increase. Rubber has gone up 15-20 percent. Our belt and hose products are oil and natural gas-based and the costs are going up so fast, it’s coming out of our profitability.”
Charley Johnson, President and CEO; Proliance International:
“I have a wide range of passions, but overall, it’s our competitiveness as a nation that I’m most passionate about. First is the fact that we don’t have a level playing field in regard to trade. We’re basically mortgaging our childrens’ futures by buying low-cost product from offshore, meanwhile the suppliers in the countries that support them are buying back our debt and controlling our destiny.
“When you think about how that affects raw material costs, China, one of the big users of raw material, uses it to support its 9 percent growth rate. So, as a result, since many of the materials these days are controlled by international oligopolies, when they more buy more, the price goes up internationally and we have no control of it. We need to think about that as a nation and do something.
“The second layer of this is health care and what we can do as a nation about this. The medical costs for companies are juxtaposed with the issue of being sure that we have all of our employees covered somehow with the ability to get good medical care. To me, that is a fundamental human issue that we need to address as a nation. “If we have people who can’t function because they are sick and don’t have health care, then we can’t be the great nation that we think we should be.”
Joe Felicelli, Senior Vice President, Worldwide Aftermarket Operations, Federal Mogul:
“The global marketplace, as it’s reflected in North America, is so diverse. Ten years ago, you could concentrate on one thing. Now, there are so many changes in commodities, pricing, consolidation and shifts in distribution channels. It’s all happening at a faster pace, so it’s difficult to zero in on one thing.
“It comes down to how you manage a company and deal with change management and the speed of things. Who knows what tomorrow’s list is going to look like.”
Frank Ordonez, President, Delphi Products and Service Solutions, Delphi:
“One of the biggest issues facing the aftermarket is whether the industry will make the switch to electronic vehicles. We will always have brake jobs, but now there’s hybrid, electronic and hydrogen vehicles and they’re all electric-based. The compressors, the fuel pumps, the water pumps and the oil pumps will all be electric. What does this mean? No belts, no hoses and the vehicles aren’t taking power from the engine. All of this is on the horizon.”
Joe McAleese, President and CEO; Bendix
“From an aftermarket standpoint, the issue I feel most passionate about is counterfeit products coming from Asia. These counterfeiters are copying our look, but they don’t know the engineering specifications and they don’t know how the product operates within a system. They don’t know the dimensional tolerances.
“Physically, they look the same but once you do some testing you can see all the differences between fake and real. In our particular product, the biggest issue is that product may fail and it impacts the brake system somewhere in the vehicle. You may have uneven lining and it all relates back to a brake valve that is a knockoff. That is the problem, but when troubleshooting the system, all you see is unusual friction wear. You’re not risking a $20 valve; you’re risking the foundation brake and friction material.
We have six sigma manufacturing processes and every one of our products is made consistently and counterfeit products are made with inconsistent quality.”
Summary by Michael V. Freeze, managing editor, Counterman:
The members of MEMA can take pride in knowing that they were influential in the passing of the Stop Manufacturing Counterfeit Goods Act (H.R. 32), but there’s still an enormous amount of work to done on the political front. The issue of health care has become a growing concern followed by the rise in raw material costs. From manufacturers dependency on the well being of their employees, to the steel, rubber and oil used to create their products, these challenges are taking a toll on their bottom lines and their ability to compete in the business world.
Whatever the issue, it boils down to the position the U.S. has in the global marketplace. For instance, with raw materials, industrial consumers – U.S. manufacturers – have no standing when anti-dumping tariff violations are brought before the International Trade Commission. Coupled with the multi-billion dollar problem of global counterfeiting, this puts the country on an uneven playing field.
Now, MEMA and other industry associations have been flexing their political muscle to convince Congress to implement policies to correct the ills of health care, raw materials and other important aftermarket issues. With H.R. 32 being a good first step, the U.S. government can take further strides to keep auto manufacturing a key element in the country’s economy.
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