Parts & Service Special
Joining Forces
Heavy Duty Aftermarket Week offers a common platform and ambitious agenda for the independent aftermarket.
Patricia Smith
Senior Editor
At the end of this month, 10 of the industry's major heavy-duty aftermarket organizations will meet in Las Vegas for the first ever Heavy Duty Aftermarket Week (HDAW).
Many outsiders see this simply as a cost-saving measure – one gathering versus 10 certainly makes economic sense. But organizers are looking for much more than shared cocktail parties.
"I want a place to go where I have a menu of choices," says Dave Scheer, president of Inland Truck Parts and chairman of the HDAW joint operating committee. "I want the opportunity to learn something. I also want good networking opportunities as well as a place where I can be represented as an independent distributor in a unified industry."
Scheer's wish list actually mirrors the objectives of the operating committee, formed in 2003 to tackle what appeared to be a downward spiral for the aftermarket and its suppliers. Basically, there were too many meetings and not enough attendees. Consolidation had reduced membership in many organizations, making it harder for parts and component manufacturers to justify convention sponsorship costs. Fewer members and smaller budgets also made it harder for meeting planners to line up the kind of speakers and programs that attract attendees.
"That was what moved us toward a consolidated meeting," says Pete Joy, president of Haldex North American Sales Division and the only manufacturer member of the operating committee. "We wanted better economics for the suppliers, but we also wanted better quality meetings for everyone."
Thus HDAW organizers set out to create an event big enough to attract some of the industry's top executives as well as high-impact speakers, educators and politicians.
The meeting begins Monday, Jan. 23 with the Heavy Duty Manufacturers Association's popular Heavy Duty Dialogue. Speakers this year include U.S. Transportation Secretary Norman Mineta plus executives from Caterpillar, Dana, SKF and ArvinMeritor. Independent distributors also will have the rare opportunity to hear from a truck manufacturer, Freightliner President and CEO Chris Patterson. And they'll get the latest news on the economy, purchasing trends and intellectual property issues from recognized experts in each field.
Heavy Duty Dialogue "really creates a pallet of discussion topics that carry over into the week," Joy says. "I think it raises the bar as far as understanding of the industry."
The HDAW agenda, starting on Tuesday, includes keynote addresses from leading industry executives and a long list of educational and technical sessions. The meeting has attracted attendees from all over the world, plus more than 200 exhibitors. "It's going to be a real melting pot for the world aftermarket," Joy says.
Scheer emphasizes that the combined meeting is by no means an attempt to consolidate organizations or prevent individual meetings of the various groups. Most of the participating organizations will hold their regular meetings in conjunction with HDAW. Distributors also will have the opportunity to schedule the customary one-on-one sessions with suppliers.
"It's designed to consolidate the meeting place and time," Scheer explains. "So if I'm a member of HDDA (Heavy Duty Distribution Association), CFS (Council of Fleet Specialists), or any of the participating organizations, I can have my meeting at HDAW. At the same time, my members have the opportunity to participate in an event that is broader and has more to offer than my individual association can offer."
Most distributors are "cautiously optimistic." Dave Willis, president of CRW Parts and current president of the National Wheel & Rim Association (NWRA), agrees that the number of meeting should be reduced. "The mistake of any association is trying to do too much," he says. "If you start spending more time on association work than tending to your business, the value of the association goes down."
NWRA and CFS have done some streamlining of their own. This month they merge to become the Commercial Vehicle Solutions Network (CVSN). Willis says the two organizations have always had a good working relationship and they share many of the same members. With membership in both declining, they felt it was a good time to merge.
"We're trying to do our bit for the good of the industry," he notes.
FILLING THE EDUCATION GAP
HDAW brings together a big and important segment of the trucking industry that, by design or default, has always been rather low-key.
"To some degree, the independent aftermarket is not recognized as the strong, vibrant part of the industry that it is," Scheer says. "Most independent aftermarket companies are well-run businesses that offer an outstanding array of products and services. That isn't always recognized by the general trucking community, even though a lot of trucking companies support us."
Four days of panel discussions and seminars should help participants build on those strengths, including what many see as their forte: knowledge of the truck parts and service business.
"The reason most distributors are successful is because their salespeople know a lot about what they do," Willis says. "So when a guy is having trouble with, say, a brake job, he calls our guy to help him figure out the problem."
That expertise is becoming even more important as many parts and component manufacturers – under pressure to hold down costs – are reducing the number of people they have in the field. "What we provide that the manufacturers can't is a person who is out and about, walking into the fleet or independent repair shop and imparting their knowledge to the end user," notes Willis.
"I think those of us in the independent aftermarket have to be solution providers," says Gene Damron, general manager of Page Brake and president of CFS. "It's easy for other people to look up something on a computer and be an exchange parts house, but quite often we're asked to do more – whether it be on-line inventory, helping customers manage their parts inventories, or helping them identify parts."
Education is a big part of the agenda for most aftermarket gatherings. Distributors also get help from more formal programs such as the University of the Aftermarket at Northwood University and CFS' Institute of Truck Parts Professionals, which is open to non-members.
ATTRACTING NEW TALENT
One "hot button" issue that the independent aftermarket shares with the rest of the industry is employee recruiting and retention.
"There aren't a lot of people coming out of high school or college saying 'Gee, I really want to get into the heavy-duty business,' " Willis points out.
But it's not just an aftermarket problem, it's an industry problem, Damron says. "I think what we really need to do throughout the industry is create an atmosphere where people want to come to work. We need to pay drivers more than a lot of them get paid today. We need to make sure that qualified technicians can make as much money working in our field as they do in others. We need to be able to recruit good sales people – bright minds, broader intellects."
As for recruiting people to trucking, "It's an industry problem that needs a broad-based industry initiative," he adds. "I think this is going to be too difficult for any one segment to tackle on its own. If the trucking companies, the parts houses and the manufacturers all work together, we would certainly accomplish a lot more than if any one segment tried to do it on their own."
STRENGTH IN NUMBERS
There has been some consolidation in the heavy-duty parts aftermarket, but instead of mergers and acquisitions, it's more common to see independent distributors band together in marketing groups – mainly as a way to compete with the nationwide parts and service networks (i.e., truck dealers) of truck manufacturers.
The groups and their members are quick to point out that there's a big difference between a buying group and a marketing group. "A buying group is basically price oriented. A marketing group provides services to customers," says Pat Biermann, president of HDA Parts Network.
"Our main goal is to help our members buy better – that's the bottom line," says Brett Upton, president of Power Heavy Duty. "But we also think we can help them sell better, which is where our marketing programs come into play."
Many of Power Heavy Duty's members are small- to medium-size distributors whose business is generally confined to local markets.
"They're the backbone of this industry," Upton says. "They're the ones taking care of the small trucking companies, the local school districts, the construction truck operators in rural America. But they're living off pretty small margins because they have to compete with the bigger guys. That's where we come in."
In addition to group buying of parts, many marketing organizations offer members discounts on insurance, computers and software, office supplies, and other products and services.
To help local distributors compete for regional and national fleet business, HDA offers fleet programs featuring national warranties, nationwide pricing and central billing. "We can set it up so a trucker from Florida can buy a part in Colorado and get billed through his Florida distributor," Biermann explains. "In a lot of cases our pricing isn't going to be the cheapest, but it will be the same everywhere that trucker goes."
When heavy-duty marketing groups first came on the scene, manufacturers feared that they would be little more than a way to strong-arm discounts with no offsetting advantage for suppliers. Marketers say that isn't so.
"We benefit the manufacturers as well as the distributors," Upton says. "If distributors can't stay alive, the manufacturers are going to find themselves in the distribution business, and they don't have the resources to do that. Groups like ours help the manufacturers wrap their arms around a lot of business. They can't get to every truck owner out there. They have to have a distribution system that's viable."
THE WORLD IS FLAT
Nobody is insulated from today's global market, says Joy. Even distributors concentrating on local customers and buying from U.S. manufacturers are impacted by worldwide economies and demand. One example: steel prices. Soaring demand in China sent U.S. prices upward, which ultimately raised the prices of heavy-duty trucks and replacement parts. The situation has eased some, but Joy says China is still a wild card. "If its economy starts heating up again, prices could go up."
Mike Hill, president of Precision Rebuilders and chairman of the Automotive Parts Remanufacturers Association, says the proliferation of low-priced offshore products has affected his ability to compete. "Core values used to be pretty rock steady," he says, "but the core values on many items have plummeted because the market is flooded with new parts. Sometimes we can't compete with the new products."
Another big change: how customers view the quality of "foreign-made" products. Joy recalls one customer that, a few years ago, refused to have anything to do with products made in Mexico. Now, he says, "I don't know of any major supplier that doesn't have tentacles all over the world, and most customers understand that suppliers with global manufacturing also have global standards."
An increase in imports has underscored what many in the aftermarket feel is an obligation to be diligent about the products they choose for their customers, no matter where that product is produced.
"Maybe you have 10 manufacturers of a given component," explains Hill. "If I set them in front of you, you would think they were identical. However, the internal components and functions of those products run the gamut from those that don't even work out of the box to those that are good, reliable parts. It's a very arduous process to qualify the vendors we use."
Hill favors laws against counterfeits, but wants to make sure there's a clear distinction between counterfeit and "aftermarket" (sometimes called "will-fit") parts.
"I've been an aftermarket supplier since 1961," he notes. "We've always taken someone else's product and remanufactured it to be as good as or better than it was new. We don't say our products meet original equipment specifications, because in many cases we don't have access to those specifications. We establish our own standards. In the remanufacturing process we often get the opportunity to see why a component failed and we redesign to alleviate that problem. So, many times, we've made product improvements."
Parts & Service continued...
