In Search Of The Real McCoy
The FBI calls it "the crime of the 21st century," but you'll rarely see it on the nightly news. It's not terrorist attacks, or kidnappings, or even identity theft. It's counterfeiting.
When Roger Nunnery learned one of his drivers was having trouble with a dash valve that wouldn't release the truck's air brakes, he didn't have time to drive 42 miles to his Kenworth dealer.
So the warranty and maintenance supervisor of Rhett Butler Trucking in Sanford, N.C., went to a local hose repair shop that also sold replacement parts, and asked for a Bendix dash valve for the Kenworth T2000.
Three days later, the driver pulled the valve to set the brakes at a scale. The valve broke off at the shaft, and the built-up air pressure shot the plunger through the cab of the truck.
"It ricocheted through the cab of the truck like someone shot it out," Nunnery says. To make matters worse, the truck was on the scales at the time, and the driver couldn't get the vehicle to move.
"These valves should last four or five years, minimum," Nunnery says. "This was the first replacement on this 2000 model year truck. I couldn't believe it broke that fast."
The breakdown cost the fleet a load of product, a service call, two hours of labor plus downtime, and five hours of drive time to pick up the driver.
"Plus, the scales operator complained to me on the phone for a half-hour," he says.
Nunnery went back to the shop where he bought the part to ask about the valve's warranty, where he was told that the failure was due to driver error - the driver simply pulled too hard.
"The driver of the truck was a 90-pound woman, so I knew that couldn't have been the case," Nunnery says.
He then called Bendix, whose field technicians discovered that the valve was not a genuine Bendix part, but rather a clone - a counterfeit. The longtime Bendix customer was surprised.
"It looked like the real McCoy, and it fit just perfectly," Nunnery says. "It was in a Bendix box, and the cost was the same. It didn't draw any attention to me that it wasn't a Bendix part."
COUNTERFEIT CONUNDRUM
Nunnery was the victim of a growing problem - counterfeit parts.
Currently, 5% to 8% of all goods sold worldwide are counterfeit - designer clothing, cigarettes, movies, prescription drugs, and auto and truck parts. They're now counterfeiting entire cars in China, a hotbed of counterfeiting for all types of products.
Fake brake pads, valves, oil filters, headlamps, batteries, fan belts, piston rings, windshield wipers, LED lamps and more are turning up all over the world, including the United States.
While heavy duty truck parts make up only a small fraction of counterfeit products overall, the problem is growing. Companies that serve the heavy duty industry, such as ArvinMeritor, Bendix, Webb Wheel, Grote Industries, Cummins, Haldex, Phillips Industries and others, are actively working to prevent and fight counterfeit versions of their products.
Traditionally, the heavy-duty market has not been as attractive to counterfeiters as the automotive business. For one thing, there's not as much volume. Another factor is the narrower distribution channel. Truck manufacturers, truck dealers and their customers maintain closer communications than in the car parts market.
"The heavy duty user tends to be more hands-on," says Mary-Beth Kellenberger, consulting analyst for Frost & Sullivan, who has done research on counterfeiting in the North American automotive industry. "They're the ones actually purchasing and installing the components, and they tend to be better evaluators."
Nevertheless, "the problem is definitely getting worse," says David L. Plaster, global aftermarket marketing manager for Eaton Corp. and RoadRanger marketing. "Five to 10 years ago, we were just beginning to see trouble. Consequently, many in the industry weren't even talking about counterfeiting. Now it's become a daily conversation."
It's hard to put numbers to exactly how big a problem counterfeiting is. "It's like chasing a ghost," Kellenberger says. "No one actually says, 'Yep, I'm a certified user of counterfeit parts.' No one says, 'Yes, I supply counterfeit components.' "
But there are several factors that are making counterfeiting not only more prevalent overall, but making it more likely to become more common in the heavy-duty market.
One is the globalization of trade. "There are plenty of countries where labor costs are very low, and it's quite easy to put in an assembly line and ship around the world with much more ease than you could have 20 years ago," says Mark Turnage, CEO of Applied Optical Technologies (which provides anti-counterfeiting technology) and co-author of the book "Counterfeiting Exposed: How to Protect Your Brand and Market Share."
The ease of acquiring technology is another factor, Turnage says. For instance, computer scanners make counterfeiting packaging quite easy.
A final factor is that counterfeiting is profitable. Unlike counterfeiting currency, the penalties for counterfeiting products are not severe. That makes it very attractive to organized crime as well as terrorists.
"In more cases than not, when you buy an industrially produced counterfeit good, you're going to be at some level supporting organized crime, and increasingly, terrorists," Turnage says. "Organized crime goes where the money is, and there's a lot of money to be made in counterfeit goods. Unsurprisingly, the terrorists follow organized crime."
The "more for less" culture of the United States doesn't help matters, Kellenberger says. "We've told people we want more for less, so people are finding a way to give us more product for the same dollars. It really comes back on us to say, 'I'm not willing to accept that lower-cost product' and the lower quality that may come with it."
WHAT'S A COUNTERFEIT?
Unlike a pirated movie or a fake Rolex, it's not always clear with vehicle parts exactly what constitutes a counterfeit. When parts manufacturers talk about the topic, they often lump a range of counterfeit, knock-off and will-fit parts into the same category - anything that's a non-genuine OEM part.
Legally, counterfeiting is "trafficking in goods featuring a mark substantially the same as someone else's in a manner likely to cause confusion," according to Sharon Barner, an intellectual property expert with the law firm of Foley & Lardner.
It's perfectly legal to reverse-engineer a part. It's not legal to sell it in a way that makes customers think they're getting the original part. And there's no guarantee that a reverse-engineered part, legal or not, is going to perform the same as the original. But laws generally don't address quality issues.
"Unfortunately, it's the customer that loses out, because he thinks he's getting something that he's not," says Brad Begley, marketing manager-North America for commercial vehicle aftermarket at ArvinMeritor.
Some parts are not outright counterfeit but are still designed to confuse the consumer into thinking they're the real deal. These are sometimes called clones or knock-off parts. They are reverse-engineered to look like the originals, as true counterfeit parts are. The difference is, they avoid actual brand names. However, they often carry the same part numbers as the copied parts and other features that can confuse the consumer.
"This is more prevalent in the marketplace than counterfeit," says Dave Schultz, marketing manager for pneumatic control systems at Bendix. "A lot of times people will think they're getting the genuine Bendix product because it's sold under the exact same parts number, and the clones are also using our alphanumeric product designation, so there is a level of confusion."
When asked if this is a gray area of the law, Art Dilger, Bendix's director of pneumatic control systems, says, "we feel it's a lot darker than gray." The company takes legal action in cases where the parts are clearly designed to confuse the consumer into thinking they're getting a genuine Bendix part, even if it doesn't carry the Bendix name.
The confusion is evident when manufacturers receive these parts for warranty claims. "We'll get warranty returns on parts that aren't even our parts, and some of them are hard to tell apart," says Dominick Grote, vice president of sales and marketing for Grote Industries. "You won't typically see our name, but it looks like an exact copy of our product." The counterfeiter may even have reproduced internal codes stamped on the lamp without knowing what that number is supposed to represent.
Similarly, Webb Wheel Products sees a lot of rip-offs of its popular 66864F brake drum. While the drums aren't stamped with the Webb name, they're an obvious copy, and many customers see the part number stamped on it and think it's a genuine Webb Wheel product.
"Our field people will go into a fleet and say, 'That's not a Webb drum,' " says Todd Manson, vice president of sales and marketing, "and the fleet manager will say, 'What do you mean, it's not a Webb drum?' "
Haldex has discovered air brake system valves that have been confirmed and validated as counterfeit, says Randy Petresh, vice president of technical services. "The valves that Haldex primarily encounters are pneumatic brake system valves, like relay valves. In addition, there are counterfeit suspension control valves that are being sold as genuine Haldex in North America."
At another level are what are sometimes called "will-fit" parts makers, which are completely legal. These companies often operate under their own brand name and offer lower-cost alternatives to OEM parts.
"There certainly are situations where you have the [parts] that are not violating any legal intellectual property laws," says Bendix's Dilger, "and in those cases, what we try to do is advise the customer to understand the pitfalls of not buying genuine. How good is the will-fit part, and what percentage of the time are you willing to risk your air brake system on the will-fit?"
SUBSTANDARD PARTS
With tight margins in the trucking industry, it may be tempting to buy lower-priced parts. But because counterfeit and cloned parts are often not as high quality as the originals, your savings will likely be short-lived.
"Downtime, as we all know, costs money," says Eaton's Plaster, "and these counterfeit parts just won't give the customer the useful life that they have come to expect from genuine components."
For instance, Bendix examined one bogus valve and found the counterfeit valve's wall was 56% thinner, making it more susceptible to cracking or even rupture. Inconsistent spring tension on the counterfeit valve was likely to result in brake imbalance and longer stopping distances. In addition, O-rings, bolts and pistons used in the counterfeit valve were built with inferior materials that are prone to accelerated wear and leakage.
"There are a lot of consequences" of using these parts, Dilger says. Not only can the valve fail, but a bogus valve can cause problems in the rest of the air system. A valve that's not performing to the right specifications can increase friction wear, overheat drums, crack seals and more.
"Using counterfeit parts may result in vehicle performance issues, and sometimes there can be more serious consequences," Haldex's Petresh explains. "In addition, the end user believes that he has purchased a genuine Haldex part, so when the counterfeit malfunctions, he will look to Haldex to honor a warranty by replacing or servicing the part. Yet, when we receive that returned part, and it is clear that it's inferior in function and performance and not a Haldex part, the end user has no recourse to obtain a new part from the counterfeit supplier."
Phillips Industries reports that gladhands are a prime target for counterfeiters. "You get into quality issues," says director of marketing Travis Hopkey. "With gladhands especially, you end up with something called porosity, where there are little bubbles inside the aluminum. It's not solid all the way through." Because they're not solid, they're more prone to breaking, a situation that can cause the trailer brakes to lock up.
Webb Wheel says it's seeing brake drums marked with a Webb parts number indicating a severe-service drum that is actually 10 pounds lighter than the genuine product. "There's some real potential for accidents," Manson says. "The heavier drum is designed to dissipate more heat, so you actually could have a drum explode."
And just imagine what might happen at the hands of a personal injury lawyer if a wheel-loss incident can be traced back to counterfeit or knock-off parts - and they can convince a jury that you should have known better.
If you knowingly or unknowingly buy a part that's not genuine, you also may be cheating yourself out of warranty repairs. "You need a partner, not just a part," says ArvinMeritor's Begley. "When you buy a part from someone that is not established and it may or may not be a genuine part, you also have to weigh what kind of after-the-sale support and service you're going to get."
Sometimes, you'll see very high quality counterfeit or cloned parts. But a common problem is inconsistency.
"A lot of the manufacturers that are known in our industry here in North America, like Grote and Peterson and Truck-Lite, we do what we call due care in the manufacturing process," explains Dominick Grote. "All our lamps are designed to pass the requirements at any given time throughout production. A lot of what we're seeing is these counterfeiters might have one lamp on a shelf locked in a vault somewhere that [meets safety requirements], but they're not making sure every one they make is compliant."
Whether you're looking at safety, reliability, liability or simply the fact that you may be supporting criminals, counterfeit parts are a bad deal. "I've never really seen anyone truly save money buying counterfeit merchandise," Turnage says. "It always comes back to bite you over the long term, and in many cases in the short term and medium term."
What You Can Do
While some fleets may knowingly buy counterfeit parts or poor-quality knockoffs as part of a "price is everything" attitude, it's more likely that you could end up with these substandard parts on your trucks unknowingly, as happened to Roger Nunnery at Rhett Butler Trucking. There are some things you can do to help keep this from happening to you.
1. If it seems too good to be true, it probably is. In an industry with as tight a margin as trucking, you're always looking for places to save money. But if you are being offered a product for far cheaper than you normally would pay, this should tip you off that it may be a counterfeit product.
"There is a whole world of product out there where fit, form and function is, in a lot of cases, comparable to a genuine product, but it is sold for a lower price," says ArvinMeritor's Begley. "It is sold as a generic, let's call it. As these 'generic' products become more accepted in the marketplace, then end users grow accustomed to being able to buy a product for a price lower than the genuine price should be. So when a part comes along that looks like a Meritor or Euclid product that is at a price point that is so much more attractive, they're at least willing to try that product - and in a lot of cases, they assume they're getting the genuine product."
On the other hand, say experts, some counterfeiters are hiking prices so they're not so drastically low as to arouse suspicion. So what else can you do?
2. Note where the product comes from. Does it say "Made in USA" or "Made in Taiwan" on the box or packaging? If you suspect a product is a knock-off, a quick trip to the manufacturer's web site or customer service line can tell you if they actually manufacture in that country.
Beware of suppliers on the Internet who may actually be located and shipping from countries where counterfeiting is known to be rampant, such as China, warns Cummins Inc.
3. Know your distributor. Where are you getting your parts - from a legitimate, reputable authorized warehouse distributor or jobber, or a guy off the back of a truck? Is this supplier new to you? Again, the Internet is a great place to start a background check.
"I would question sources that you're not familiar with, that haven't been there for a long time," Begley says. "The customers we sell through - that an end user would buy from - we've been dealing with them for years and years and in some cases decades."
Be careful at trade shows, which have become a magnet for counterfeit products.
"Five years ago, if you went to the Mid-America Trucking Show, you would have seen the guys you're used to seeing," Grote says - big names like Grote, Truck-Lite, Peterson. "If you walk around the truck show today, you'll see just about anyone with LED lighting. Distributors that are importing them, other accessory lighting guys.
"We're not saying every importer makes counterfeit or non-compliant products," Grote adds. "It's making sure you know who you're buying from a respected name and brand with some history."
4. Details, Details. Take a close look at parts before installing them. Minor markings on a product can be telltale differentiators between a real and a fake part. Are the part numbers and RMA codes on the part accurate? It may seem obvious, but make sure the name of the company is on the product. Many buyers are fooled by products that look the same, with the same part number, but don't actually have the brand name on them.
Take a close look at the packaging. Is the brand name spelled correctly? Are the colors what you expect from the original manufacturer? Is the printing job poor? "In many cases, we see relatively OK products packaged in really [lousy] packaging," Turnage says.
"If you're not installing the part yourself, ask the technician to see the replacement part and package," says Scott Emmer, brand protection manager at Federal-Mogul. "Inspect the package and if it appears flimsy, lacks the name brand or logo, or looks different than the package you're familiar with, then the part may not be genuine."
"Question whether a part is genuine when you find a part that is significantly cheaper," says Haldex's Petresh. "Look in the box. Be sure to check the actual part for the proper brand and labeling. Be careful when purchasing parts. A cheaper part just isn't worth the risk."
5. If you find a part you think is counterfeit, contact the legitimate manufacturer. Some manufacturers use various markings and antitheft devices that would help you distinguish the genuine product from a fake one. In addition, your information will help the manufacturer in any investigations or legal proceedings and will help protect you from lawsuits or potential criminal charges.
"We are involved with organizations that are pushing legislation and lobbying with various government agencies to adopt stricter policies to prohibit the import of counterfeit parts," says Petresh.
Customers need to become more savvy, Turnage says. "Because the borders of Europe are relatively more porous, the average consumer in Europe is far more savvy than those in the U.S. about looking and making sure it's a legitimate product, he says. "That's going to change. The world's changing, and we're going to be forced to change with it."
Crime of the Century continued...
