If you’re a parts distributor, you’ve likely been there. Across the desk sits a smooth-talking salesman who’s got a slick PowerPoint presentation showcasing a new product that’s going to revolutionize the industry. Maybe it’s a friction product, with stopping distance and durability that rivals the most well-known name brands. So what if it’s made in China? So what if it comes in a white box with no recognizable logo attached to it? So what if you’ve never heard of this guy or the company he’s representing before? It works well (so he says), and better yet it’s cheap! Real cheap. How can you say no?

As a distributor or parts shop, carrying unproven, Brand X products exposes you to huge doses of liability, particularly in the US or even if that product is going to end up in the US. Sarah Bruno, a lawyer with Arent Fox, recently told delegates at Heavy-Duty Aftermarket Week that parts shops and distributors are responsible for the quality of the goods they peddle, despite the fact they likely had no part in the manufacturing of said product.

Since most problematic white-box or ‘will-fit’ parts coming into the market are imported by off-shore companies that have no assets in the US, if something goes wrong, plaintiff lawyers will usually turn their buggy, dollar sign-filled eyes on the company that sold the part in question. And according to Bruno, claiming ignorance is not a defence. She said distributors can be found liable even if they had no knowledge the part posed a risk.

So what’s a distributor to do? Let’s face it, there are valid reasons for carrying will-fit parts. The Bendix’s and ArvinMeritors’ of the world don’t ink distribution deals with every shop that comes along. And if your customer requires a common part and the only manufacturer willing to supply you with that part is not one of the big names, you owe it to your customers to carry an alternative or you risk losing their business altogether.

Bruno said it’s essential you do your due diligence before agreeing to distribute parts for a new supplier. That could get expensive. Travelling to China to visit their production facility may seem excessive, but as Arent Fox lawyer Tony Lupo said: “If you’re not going over to check out their quality, you can’t really be sure. If you’re sued, the first thing a plaintiff lawyer is going to ask is ‘What have you done to check the specifications of this product?’”

Bruno advised parts distributors to put contractual safeguards in place when agreeing to carry parts from a new supplier. At the very least, that should include indemnity clauses that protect the distributor from blame should something go wrong, she said.

With the influx of new off-shore parts into the North American marketplace, Lupo said it’s inevitable that a sup-par part will eventually cause a tragedy and when the lawyers get involved, the distributor will likely get caught in the crosshairs.

“It’s only a matter of time before something happens,” he said. “How much risk do you want to take? If we sell inferior products and that causes a tragic accident, we can’t hide behind the idea that this isn’t our problem.”

Permalink | Comments (0)

Recently, a reader e-mailed us some pictures of a new truck sporting the International logo, which appeared to have been photographed during a covert operation the likes of which you’d expect to see in a James Bond flick. The low-resolution images appeared to have been snapped with a cell-phone camera, and the truck itself looked like something out of a futuristic (or maybe retro?) Hollywood flick.

Having spent a few days with representatives from International Truck and Engine here in Las Vegas, I can confirm the photos are real. The truck is real. It’s called the LoneStar and will be officially unveiled in a few weeks at the Chicago Auto Show. Beyond that, I can’t report much more at the moment. Partially because International is fairly tight-lipped about their new product and I don’t know a whole lot more about it. And also because of my fear of reprisal from the company, which incidentally, has invested a substantial sum of money into the new rig and really isn’t too happy with the fact pictures of their newest baby were leaked on the Internet in the first place. So, you’ll have to look elsewhere to see the pics – I won’t post them here.

Being a bit of a cynic by nature, I initially thought the pictures may have been intentionally leaked by International itself. Having spoken with some of the people who worked on the project, I no longer think that’s the case. The story goes as such: The LoneStar prototypes were sent to the US West Coast where some promotional video was to be shot. Believe it or not, the Golden Gate Bridge in San Francisco was even shut down for a few hours to accommodate the video shoot. When the trucks were put to bed that evening, the local dealer allegedly neglected to properly tuck them in and cover them up for the night. Someone with a cell-phone camera happened by. The next thing you know, thousands of e-mails depicting the new truck were being circulated. The cat was out of the bag.

Based on the scant information I have been able to gather about the new truck, as well as my own observations (limited at this point to the pictures making the rounds on the Web and a short teaser video shown by International), you’re going to love it or hate it. It’s a radical departure from the traditional truck ‘look’ that dominates the North American market place. International has dared to be different with the design of the LoneStar, and not everyone is going to like it. But I think those who do like it, will like it a lot. And give International some credit for rolling the dice and providing fleets and owner/operators with an alternative to the norm.

I wasn’t able to extract any information from the International reps I spoke with this week about fuel economy, aerodynamics or performance characteristics. Based on a short teaser video the company showed us, the interior will be one of the truck’s strongest selling points. If you want a condominium-style living room instead of a just a bedroom back there, I think you’ll be pleased with what you’ll find. But having said all that, the truck will be as big a surprise to me as it will be to you. Editorial director Lou Smyrlis will be on-hand at the launch and will be posting a report on Trucknews.com as soon as the information becomes available for publication. Thankfully, we have something major to look forward to in early February – a sure cure for the February blahs.

Permalink | Comments (0)

My work has got me very involved in understanding the Zero Waste movement lately -- and the zero carbon footprint dimension -- and I've begun to feel that -- with certain qualifications -- it offers the philosophical underpinning to solve many of society's (and the world's) problems. We are the ones who will have to change our ways, and our value system. I'm beginning to understand that certain forms of pollution, poverty, war and demagoguery are not accidental, but the inevitable consequence of our consumer culture and the imperial projection of our power around the world extracting and exploiting human and natural resources on terms that are favorable to us, backed up by military force.

To break the cycle, we first have to understand the system upon which we stand, which is largely out of sight and therefore out of mind, and we then need solutions -- because it quickly becomes depressing and people will simply "tune out" if the bad news isn't delivered almost hand-in-hand with information about what we can do to make positive change.

To that end, if you click on the two links below, you'll find a very thought provoking presentation of the issue of externalities and the environmental and human impacts of the hyper-consumer culture and economy, and also a talk by Amory Lovins of the Rocky Mountain Institute about how we can "win the oil end game." Watch them when you have about 15 minutes to view each. The Lovins talk will especially interest anyone in the transportation industry.

http://www.storyofstuff.com/

http://www.ted.com/index.php/talks/view/id/51

(If the second link doesn't work for you, visit TED.com and search "Lovins." This is Amory Lovins on "We must win the oil end game.")

Permalink | Comments (0)

I’m in sunny Las Vegas for Heavy-Duty Aftermarket Week, and if you’re in the parts and service business, you really should be here too. My head is beginning to hurt due to all the numbers being bandied about (honestly, it’s the numbers) from industry-leading forecasters and researchers.

The heavy-duty aftermarket is on the brink of a transformation and if you want to cash in on future growth opportunities, you first have to know what’s coming down the pipeline. There were no shortage of experts on-hand at this week’s event to share their insights, and while they’re primarily based on US data, they’re equally relevant in Canada. I will post several entries in my blog to bring you up to speed on what’s being discussed here in Sin City.

The heavy-duty aftermarket is a $15.6 billion industry in the US (all figures discussed in this blog entry are in US dollars, not that it matters much anymore). Stu MacKay, of MacKay and Company, and co-hort (vice-president, officially) David Fulghum, project that industry will grow to $20.3 billion by 2016. That’s a substantial growth, but the analysts predicted some players will benefit more substantially than others.

Comparing data from 1989 to that of 2006 showed independent garages have managed to increase their share of the pie from 5% to 13%. That came largely at the expense of Heavy-Duty Distributors and Product Specialists (HDD/PS) which saw their portion fall from 34% in 1989 to just 26% in 2006. Truck dealers increased their share from 38% to 43%, according to data, which is gathered from tens of thousands of surveys distributed throughout the industry.

Fulghum said the trend shows the importance of good service. Independent garages, by providing reliable service, have taken their traditional ‘wrench-turning’ duties and leveraged that to increase their share of the parts business, Fulghum noted.

Impressively, independent garages have also been able to maintain profit margins on parts (30.2%) comparable to the margins enjoyed by heavy-duty distributors (32.3%).

“Independent garages have more than doubled their businesses and at the same time have raised prices on parts,” Fulghum explained. “It shows the value of good service. They are making more money on parts, which is being driven by turning a wrench.”

On the service side, it’s worth noting that in 1997, 410 million hours of service was required on the US truck population. In 2007, that rose to 484 million hours due to the growing truck market, but the hours of service per truck was down 19%. Seventy-five per cent of service is done by the truck owner, be they a fleet or owner/operator, Fulghum said. But outsourcing is increasing and in many cases, independent garages are capturing that business, according to MacKay and Company’s data. A big part of the reason could be labour rates – independent garages averaged $66.15 per hour in 2006 compared to the average dealer rate of $80.36 per hour.

MacKay said parts and service providers have opportunities for growth ahead of them. He noted the average age of the Class 8 truck in the US is increasing and will continue to do so due in part to the higher purchase price. He said his company is predicting the aftermarket will see “meaningful growth for each of the next five years.”

Sixty-seven per cent of distributors and 71% of suppliers said in a survey they expected business to be up in 2008, despite the slowing economy. But while independent garages appear poised to continue gaining momentum, they will face new challenges in the future, noted MacKay. He pointed out there’s increased vertical integration among OEMs, which could favour dealers, which he suggested could be getting 49% of the aftermarket business by 2016. Already, 67% of Freightliner and Sterling trucks have proprietary engines under the hood and 63% of Volvos. International sits at 22% but that’s poised to increase with the impending introduction of their own big bore engine. The trend, said MacKay, “will give dealers a bigger edge than they have today.”

I’ll be sharing more information from Heavy-Duty Aftermarket Week in future blog entries.

Permalink | Comments (0)