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Repairing the Crash-Parts Market

The situation with replacement crash parts may be a bit of a wreck, but it’s not a total loss. What’s considered a pile of unwanted sheet metal and plastic by many repairers could be turned into a more favorable and profitable alternative to OE parts — if the industry can quit complaining and learn to communicate.

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One of the more sensitive issues in body shops today is the use of alternative replacement parts. Whether they’re aftermarket parts made in Taiwan or used parts found in a local salvage yard, repairers feel strongly about not using them.

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"Aftermarket parts are junk," said one shop owner in the 1999 BodyShop Business Industry Profile.

"Used parts are just that — used and abused," said another respondent.

Still, both alternatives have a place and a purpose in the crash-parts market. They offer repairers, insurers and consumers an alternative to brand-new original equipment (OE) parts. (Does the word "monopoly" ring a bell?) They also serve as direct competition, which helps keep prices in check.

So why haven’t alternative replacement crash parts lived up to their potential? Will repairers ever embrace them, rather than view their use as an insurer mandate and a huge hassle? With some alterations in the manufacturing process, improved communication between repairers and manufacturers, and a little thing called cooperation, many in the industry think it’s possible. The first step is to better understand the current crash-parts situation.

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To help you do that, this two-part series will cover the specifics of aftermarket and used parts. The potential for improved quality and ease of use is out there; you — as an industry — just need to understand your role.

The Aftermarket Arena
It’s no secret that many collision repairers have a love/hate relationship with aftermarket parts: They pretty much love to hate them. But the fact remains that aftermarket parts have a place and a purpose in the collision repair market. As direct competition to OE parts, they’ve helped keep prices in check.

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Cases in point:

• In May 1998, Nissan reduced the price of certain grilles, front-bumper fascias and reinforcements for both Nissan and Infiniti vehicles by as much as 40 percent. A press release stated the move was designed "to enable collision repair shops and dealers to purchase genuine Nissan parts at prices competitive with those of aftermarket parts."

• Toyota reduced the prices of the 70 most frequently replaced crash parts by an average of 20 percent. In 1994, a Toyota Camry fender cost $265.79. In 1995, it cost $259.96. One year later, it cost $143.88.

• Joining the bandwagon, Ford cut bumper-fascia prices … again. "The new list prices average 7.2 percent below previous list prices and apply to the 41 bumper fascias," said a press release. "Ford launched the program to increase its competitiveness in the bumper-fascia parts segment."

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But still, repairers fight the use — and existence — of aftermarket parts. Why? In the 1999 BodyShop Business Industry Profile, 100 percent of respondents who don’t purchase aftermarket parts cited "poor fit" as the reason. A slightly smaller number of respondents, 89.1 percent, also cited "poor quality."

In a survey co-sponsored by the National Collision Marketing Institute (NCMI) and the Society of Collision Repair Specialists (SCRS), shop owners reported that OEM parts provide an acceptable fit 97 percent of the time, CAPA-certified aftermarket parts 27 percent of the time and non-CAPA certified aftermarket parts 13 percent of the time.

Obviously, there’s a problem with the fit and quality of aftermarket parts, but what, exactly, do "poor fit" and "poor quality" refer to? Are corners round rather than square? Are mounting holes off center? Is corrosion protection on welds, brackets and flanges insufficient? What, specifically, is wrong with aftermarket parts? And, specifically, how can it be fixed?

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An Abridged Aftermarket Tour
On a recent trip to Taiwan, several industry members had the opportunity to meet with manufacturers of aftermarket crash parts and tour their facilities. Their overall impression: The manufacturing of aftermarket crash parts is less than an exact science.

"[The Taiwanese manufacturers] have the capability to make very high-quality parts, but the level of detail they put into their sheet-metal parts is lacking," says Patty Zimmerman, who’s currently working as an industry consultant and accompanied the group to Taiwan.

Exactly what "details" are lacking?

To design the tooling for a CAPA-certified aftermarket part, manufacturers must purchase and measure five OE parts. (That’s right, only five.) The average of those measurements is then used as the "standard" to create a model. At one Taiwanese manufacturing plant, the standards for all the parts manufactured there were stored on the floor in a back room — leaving ample opportunity for damage.

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Once a model is created from the standard, it’s scanned by a computer that transfers the dimensions to copying machines. A mill copy machine then simultaneously traces the model and cuts the tooling — similar to the process of duplicating a key.

The problem is, there’s no guarantee the parts used to create the standard haven’t been damaged or distorted during shipping. There’s also no guarantee the parts purchased by the manufacturers are the best ones. As any manufacturer or photocopier salesman will attest, if you start with a flawed original, the copies will progressively be more flawed.

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In addition to learning about the methods used to establish a part standard, the American delegation examined the tooling used to manufacture crash parts. While tooling for an aftermarket fender can cost $200,000 to $300,000, tooling for an OE fender can cost $2 million. According to a number of the delegates, this price difference was reflected in the quality and appearance of the tooling.

Lou DiLisio, vice president of Carter & Carter and current chairman of the Collision Industry Conference (CIC) Parts & Air Bag Committee, was one of the delegates. He says OE tooling is typically "beefier" and the metal is more polished. Also, flanges for hole punching are sharper, and there’s an attention to detail in the corners and radii throughout OE tooling that’s not found in its counterpart.

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Another "fundamental flaw," as one of the delegates defined it, is in the measuring jigs. Each manufacturer is responsible for building its own fixtures, which poses significant issues when dealing with consistency.

"We saw many measuring jigs that had rounded corners when the [corners] should have been pointed, and vice versa," says DiLisio. "This proved to be an issue because, with the tolerances CAPA allows, a part with a rounded corner could still be ‘measured’ acceptable when, in reality, [its corners] should have come to a point."

While the Taiwanese manufacturers did employ salt-spray machines to test corrosion resistance, delegates were surprised to discover that only a cut-out from each part, rather than the whole part, is tested in the machine.

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"I believe it’s far more important to test the products for corrosion where it happens the most often," says DiLisio. "In areas of this country where salt or a sand/salt combination is used in winter months, it’s inside the inner and outer panel flanges and between braces where the road salt and grime lay and cause corrosion."

Delegates also saw first hand how non-OE parts are stored before shipping. Unlike their OE counterparts — stored in carts designed to meet manufacturer specifications and avoid damage — the aftermarket crash parts were stored in a variety of less-than-ideal ways, allowing for a bigger chance of bent corners and dented sheet metal.

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After the manufacturing process is complete and the parts are ready for shipment, packaging becomes the next concern. When it comes to shipping the parts overseas, there are no uniform guidelines and, as a result, many parts are damaged in transit. In response, many of the non-OE parts manufacturers are making an effort to improve shipping cartons. But, as the saying goes, you can’t please everyone all the time. Several U.S. distributors have complained about one of the manufacturer’s new packaging because it cuts down on the number of parts that fit into a container, therefore increasing shipping costs. Though DiLisio agrees that the distributors’ point is valid, he questioned whether the reduction in shipping damage helps offset the additional purchasing cost.

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Another packaging issue raised by the delegates was the imprinting of "CAPA Certified Part" on boxes that could contain de-certified parts. If a part is de-certified and the CAPA sticker is removed but the part is shipped in a box marked otherwise, an unsuspecting technician could use the part believing it was CAPA certified.

"We also saw CAPA-certified parts boxes with parts in them that didn’t have stickers applied," says DiLisio. "The explanation we were given was that the stickers would be applied ‘later.’ This is very concerning. … What if the part wasn’t certified after testing and it was already packaged?"

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Another concern raised by delegates was the issue of tool unification. Under this system, one manufacturer sets up the machinery to produce a single part, and all the other manufacturers then order press runs of that particular part and put their individual brands on them. Another manufacturer then sets up the machinery for a press run of a different part, and the process is repeated. Currently, more than 150 parts are made using tool unification.

The whole system sounds a little sketchy but, in Taiwan, it’s legal. However, there are some industry members who feel since the Taiwanese manufacturers sell parts to the United States, tool unification violates American anti-trust laws.

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"I think tool unification should be illegal and that someone should slap a lawsuit on [the manufacturers]," says Zimmerman.

Taiwanese manufacturers began instituting tool unification to save money. Unfortunately, the rest of the aftermarket sheet-metal parts chain — distributors and repairers — hasn’t been as fortunate. Tool unification has caused some parts prices to rise as much as five times their original cost, says Zimmerman.

"What [the manufacturers] do is sell off the rights to make a specific part to one manufacturer," she says. "Then that manufacturer can price fix or charge anything he wants for the part. He then gives what I call ‘royalties’ to the manufacturers who aren’t making the part. In other words, there isn’t any competition on that particular part."

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Why Didn’t You Just Say So?
Now that you have a better understanding of how aftermarket parts are made, you probably have one question: Why?

In defense of the Taiwanese manufacturers, they haven’t had much communication with consumers or collision repairers in the United States. Instead, their main communications link has been distributors — who keep pushing for lower and lower prices.

Upon seeing the Taiwanese manufacturers’ investment in technology, Chuck Sulkala, a Boston-area shop owner and a delegate on the Taiwan trip, says it’s hard to believe manufacturers don’t have the desire to do what’s necessary to sell their parts to recoup that investment. "Business is business in any country," he says.

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However, when the delegates pointed out areas of concern, including improved packaging to prevent shipping damage, an almost universal reply from the manufacturers was that it might affect cost.

"It became very evident that [the manufacturers] were price driven, not quality driven," says Sulkala. "This thinking has probably occurred from the very beginning and has been reinforced to so many for so long that it, apparently, is now the standard."

When Sulkala told manufacturers that he — and presumably many other shop owners — would be willing to buy and use their parts if they cost more, they seemed genuinely surprised.

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"Insurers have been trying to hold down costs by seeking, asking, expecting or demanding — your choice — that a less costly product be used," he says. "This, combined with the fact that distributors are seeking to buy the least expensive product to maximize their return, only adds fuel to the fire that cheapest price is the most important factor."

According to Sulkala, since the manufacturers were only communicating with the distributors or CAPA, which was 90 percent controlled by insurance company representatives, there was really no way for them to understand anything other than what was expressed by those groups. "The only issue of quality for both parties has been that CAPA has certified the parts as fitting when, in fact, the key issues to a repairer are more than just that for which CAPA inspects," he says.

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Another issue that’s led to the branding of all aftermarket parts as "bad" is the lack of autonomy Taiwanese manufacturers have in the U.S. market. According to those who’ve been to Taiwan and witnessed the manufacturing process, there is a difference in companies and the quality of parts they produce.

"When good milk gets mixed with bad milk, you end up with a lousy product," says Sukala. "And that’s exactly what’s been fed to the American repairer."

Repairing the Aftermarket
The aftermarket-parts situation may be a bit of a wreck, but it’s not a total loss. As a collision repairer, you’re in the business of fixing things, so how about rolling up your sleeves and getting involved? With your help, a pile of unwanted sheet metal and plastic could be turned into a more favorable and profitable alternative to OE parts.

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Since this is probably new territory for you, other industry members have come up with suggestions on how to straighten out the situation. What they need most from you is support.

After returning from Taiwan, DiLisio prepared a report outlining his observations, concerns and suggestions for how manufacturers and collision repairers could work to improve the parts market. Among other things, DiLisio suggests the industry:

• Develop a method of communication that would offer those who haven’t seen the manufacturing process a chance to experience it, possibly through videos.

• Create an inter-industry advisory council or focus groups that include manufacturers, distributors, repairers, etc., to discuss issues surrounding aftermarket parts.

• Work more diligently with CAPA to understand the their perspective.

• Brainstorm with an inter-industry group about how to better obtain a "standard" or "master" for the re-creation of parts from the start.

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• Work with CAPA to ensure consistency and accuracy of test fixtures.

• Work with an inter-industry group to establish a more robust list of items to look at by CAPA during its inspection process.

• Resolve packaging issues regarding the imprinting of "CAPA Certified" and establish a packaging standard.

• Discuss the cost differences between OE and aftermarket tooling to determine reasonable methods to make the tooling more uniform.

• Create a standard for hood strikers that can’t be deviated from as a critically important safety issue.

• Modify holding-fixture attachments to ensure more accurate and consistent component placement.

• Ensure tooling is refined so holes and knockouts are punched with precision and have no jagged edges.

Though DiLisio’s suggestions deal with many aspects of the manufacturing process, there’s one re-occurring theme: The key to improved quality is opening the lines of communication between aftermarket parts manufacturers and the end user — you.

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And some industry members have already taken this first step.

SCRS has extended its first two company memberships to AutoLign Manufacturing Group, Inc., which is based in Michigan, and Gordon Auto Parts Co., Ltd., the second largest supplier of aftermarket sheet-metal parts to the United States. With both manufacturers as members, SCRS hopes interaction among aftermarket parts manufacturers, distributors and industry professionals will increase.

"Aftermarket parts manufacturers can’t create a quality product if they remain out of touch with their end user: the collision repairer," says John Loftus, SCRS executive director. "We, as an industry, must make sure these vendors, their distributors and the insurance industry gain a first-hand understanding of the collision repairer’s real needs."

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By partnering with SCRS, Gordon and other aftermarket parts manufacturers gain an additional advantage: They move closer to creating a brand-name presence that’s linked to quality. "The day of generic aftermarket crash parts that lack clear identity is over," says Loftus. "In the future, a manufacturer’s product will live and die on its reputation alone."

Across the ocean, other manufacturers in Taiwan are also taking steps to improve communication and, as a result, product quality:

• In addition to its SCRS membership, Gordon Auto Parts has opened an 800 number, which is answered in Texas, and has applied for a toll-free fax service for product complaints. Gordon also re-designed its shipping box, which now includes bubble wrap and a better sponge to protect its contents from damage.

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• Ensure-Tech Enterprises Co. Ltd. plans to promote a new class of high-quality parts. "Basically, we’ll get them CAPA certified and then go beyond CAPA standards," says General Manager Ting Nan Lo. How will the company achieve this level of quality? "We’ve built a new jig so we can compare the contours to OEM," he says.

• Conjoin Key Industry Co. Ltd. has also set up an 800 number for complaints, which is listed on a sticker that’s affixed to the company’s parts.

• Keeping the customer in mind, TYC Brothers Industrial Co. Ltd. recently invested $2 million into its operations. Another $1 million was invested in the company’s new laboratory. "We’re trying to improve the quality controls for testing our machines and instruments," says Chairman C.C. Wu. An additional $20 million was invested in new tooling.

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Parts Should be Parts
Since 1988, more than 15 million CAPA-certified aftermarket parts have been used by collision repairers. Obviously, there’s a market for alternative replacement crash parts.

So why hasn’t the potential of that market been realized? Why has such a viable and economical alternative to OE parts fallen short of expectations? Repairers are quick to blame the overall quality of aftermarket parts but, when you get down to it, a lack of communication between manufacturers and repairers is really the culprit.

Solving the problem will take an about-face for this industry. Arguing day after day about the "fit" and "quality" — two relatively ambiguous terms — isn’t going to solve the problem. Instead, get together with fellow shop owners, industry leaders, distributors and even manufacturers to talk specifics and brainstorm solutions. After all, turning aftermarket parts into a worthy opponent to OE crash parts will benefit everyone — including you and your customers.

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The potential for a favorable and profitable alternative to OE parts is out there, but it’s up to the industry as a whole — which includes you — to change the course of crash parts manufacturing. That shouldn’t be too difficult. After all, aren’t you in the business of fixing things?

Manufacturing OE Parts

Compared to the process employed to manufacture aftermarket parts, the process used to make OE parts is an exact science.

Once production of a specific vehicle is finished, its tooling is taken to a factory that’s under contract with the OEM to make crash parts. If the tooling needs to be modified at the crash-parts factory, it’s done in agreement with the OEM.

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Before tooling is dismantled, representatives of the OEM and the crash-parts maker sign off on the last part off the assembly line. That part becomes the master and is kept under lock and key.

At the crash-parts factory, the first part off the press is checked against the master. Representatives of the parts factory sign off on it, and that part becomes a duplicate master. Duplicate masters for all parts produced by the factory are kept in an archive of sorts. They’re marked for where welds go and which robotic welder will make the welds. Trouble spots are also highlighted. The duplicate masters are hung from peg boards to minimize damage.

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Each hour during manufacturing, parts are checked in checking fixtures and signed off on by a supervisor. When a press run ends, the last part off the line is checked against the first part, and everyone signs off on it. That last part is kept indefinitely and used to check against the first part off a subsequent press run.

Each step of the way, the parts maker works off the OEM’s production standards. Even the packaging is done to OEM specifications.

CAPA De-Certification

CAPA inspectors check 80 percent of the certified part lots manufactured. Just how many part lots of have been de-certified at the factory level?

• January 1999 — 11.
• February 1999 — 18.
• March 1999 — 38.

Source: CAPA News.

CAPA Plastic
Manufacturers:

Percentage of
Product Certified:

   

Polywheels

88%

AutoLign (formerly the Colonels)

49%

Tong Yang Plastics

N/A

Tong Yang Plastics

N/A

Plastic Manufacturer Average

69%

   

CAPA Metal
Manufacturers:

Percentage of
Product Certified:

   

Jui Li

96%

Ti Yee

84%

Chang Jung

81%

Gordon

81%

Yung Shine

66%

Conjoin Key

49%

Auto Parts Industrial

44%

Gin Ho Lian

37%

Tong Yang Metals

35%

Wel Lun

28%

Ensure

16%

Nan Jhi

16%

Da Juane

7%*

San Wampum

6%

Auto Power N/A

N/A

Chung Fu Ching

N/A

Yeou Wei

N/A

Metal Manufacturer Average

46%

   

Source: CAPA News.

 

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