These days, engine rebuilders should be in their glory. Just do the math: instead of replacing an aging vehicle for tens of thousands of dollars, a consumer can spend just a few thousand and wind up with a virtually new engine that’s not only as good as the original was when it was new, but better. Not to mention the lavish warranty coverage many engine rebuilders offer for their work.
If only it were that easy. The engine rebuilding trade is experiencing a steady, slow decline and opinion is divided on whether the economic crisis means things will look up or get worse for engine rebuilders. Engine rebuilding makes as much economic sense as ever, but you can sense the frustration of rebuilders at the lack of awareness among their potential customers.
“I’m trying to diversify my business,” says Justin DeMatteis, owner of Arcan Machine, a North York, Ont.- based shop that’s been in business for 35 years. “I can’t rely on service stations any more to rebuild. A lot of the time I have to reduce prices to get a job.”
DeMatteis says the used engine business sometimes takes work from him: so in the best competitive fashion he has decided to move into this line of work too, although he remains a firm believer that rebuilds offer much better value.
“I have to explain to customers that it’s a crap shoot with used engines,” he says. “You get a short warranty on them. Rebuilds are better than new: you take the engine completely apart and rebuild it. It’s basically a zerokilometre engine.”
In addition to opening a service bay, broadening his rebuilding work to include forklift, marine and snowmobile engines and picking up some work distributing parts to service stations and other rebuilders, DeMatteis has tapped some revenue in building new engines. “I can supply them for a reasonable price, so I’m trying to hit that market.”
He’s found 6.5L diesels to be a good market. The engines are known for cracking, and DeMatteis can make the point to customers that his builds have new cores and new cranks — parts that are otherwise very difficult to come by. “I use aftermarket cores but they do the same job. I haven’t had any complaints.”
Other innovations include an outsourcing program where Arcan will take over a whole job for a service station or other customers.
“I do everything,” he says. “I price it out, charge him, and he charges the customer. We don’t make as much money this way as we’d like to, but it’s enough to pay the bills and keep going. Diversifying is the only way to go.”
DeMatteis is also leveraging the Internet, searching for people who have posted requests for help with engines and then getting in touch personally. “I post a lot of ads too. Business is slow for this time of year, but I’m not at a point where I have to think about shutting down — although I may have to downsize.”
The Good Old Days?
Do manufacturers today build better engines and is that having an impact on business? Unlike many in the business, DeMatteis isn’t so sure about that one.
“I find the older ones are probably tougher than the new ones. I had a call from a customer with an eight-year-old Ford Focus with 40,000 kilometres on it,” he says. “They’d left the frost plug in when they built the car! I’ve gotten cars direct from dealerships with problems.”
You guessed it: he’s going after work from the dealerships too.
“The engines now last so long that by the time they need to be replaced the customer just buys new,” says Tony Mihevc, owner of Scarborough, Ont.-based MTM Engine Rebuilders. “They just go forever these days. But people still mistreat their engines and this creates business for us.”
Mihevc says he feels the business declining now, although custom markets such as marine are holding up a little better. MTM does some forklift work for Wajax, the largest Hyster distributor in Canada, but even they don’t get as much rebuilding work because people are reluctant to spend money on rebuilds.
That lack of awareness is an ongoing frustration for Mihevc, who knows the quality of the work he does and the underlying value proposition of rebuilding. You’re looking at $2,000 or up for a rebuild. With installation that can get up around $4,000 for the whole job. It’s still cheaper than new, but people just don’t see it that way.”
Mihevc does see some hope that attitudes will shift given the economic downturn.
“I’d say the engine rebuild business has gone down in last few years,” says Louis Mangov, General Manager of Toronto-based Crosstown Engine Remanufacturing. “Five years ago, we were building for example runs of engines — 4.3s, 350s, 2.2s, 2.6s. Now we’re doing totally different engines like a Jag V8 or Subaru 2.5. We still get some of the traditional 4.3 Astro Vans, Blazers and diesels, but the days of having an inventory of 50, 100, 150 engines and turning that over in three months are gone. Now it’s two, three engines at a time as opposed to, say, ten at a time.”
Spreading the Word
Awareness is the biggest hurdle for the industry, Mangov says. “Customers don’t know rebuilding is an option, or where to get an engine rebuilt, or that it’ll be better than the original. The dealers get in on the act too. They may be working with an independent rebuilder or doing it themselves, but we can provide a better product at a lower rate.”
Mangov says that having been in business for decades helps him survive in tough times, relying on the word-of- mouth reputation built up over the years. “If you do good work you get that referral business, and you need it. You can’t advertise engines on a bulletin board, because people don’t know you and they’ll want that referral.”
For Mangov, the best guarantee of success is to maintain the engine knowledge and expertise that are the hallmark of the rebuilder. “I study new engines to keep current, not just to rebuild them but to understand why problems occur in the first place.”
Providing a three-year, 60,000 km warranty means that he’ll see any problems that come up and can use that experience to improve the work he does. Information is also a big value-add, he believes. “We tell customers how to maintain the engine. We want them to leave and not have to come back — obviously within the 60,000 km, but well beyond that. We want to build engines that last longer than original OEM ones.”
“Knowing how you can improve on the original is a central part of Mangov’s approach. One example he cites is Subaru, which can have a problem with blown head gaskets. “I had one in and when I looked at the deck surface of the cylinder block it was very rough. So now when we rebuild those engines we slow our cutters right down to a very, very slow speed and get a really nice finish. Someone who doesn’t have the knowledge and the equipment to do that — or just won’t consider doing that process — won’t get the long life out of that engine.”
At the end of the day, the key to survival is getting the word out. “I have to keep my customers informed, and keep myself informed,” says Mangov. “It’s a huge part of what I do.” In a fast-changing economy, even those who are the best at what they do can’t afford to be blindsided by the next market shift.