COUNTERFEIT BEARINGS SEIZED AT TORONTO AIRPORT

On Friday, July 13, The Timken Company received an ominous phone call from the Royal Canadian Mounted Police (RCMP) asking about counterfeit bearings.

Canadian customs had intercepted a full pallet, about 500, of what seemed to be the company’s bearings at Toronto’s Pearson International Airport in a shipment coming in from China.

“They sent some photographs of the cartons and the external packaging, and asked if we could determine whether they were counterfeit. Unfortunately to the trained eye—or the reasonably trained eye—the differences can be hard to spot, but the actual cartons looked wrong enough to raise suspicion,” says Evan Boere, business development manager at Timken in Mississauga, Ont.

All Timken products are packaged in black and orange cartons manufactured to a specific corporate standard that use holograms for counterfeit protection. Boere notes this packaging was lacking a hologram and the barcoding was wrong.

“Those were the first indications,” he says.

Timken’s experience is not an isolated incident. The World Bearing Association has embarked on a mission to educate customs officials around the world about ways to spot counterfeit bearings. In fact, the organization was formed specifically to tackle the problem of fake bearings and has launched the Stop Fake Bearings—http://www.stopfakebearings.com—campaign. These counterfeits don’t just impact the company’s bottom-line, the shoddy performance of these fakes can cost people their lives.

 Counterfeit bearings have found their way into automobiles and commercial airplanes

After the shipment was flagged, the RCMP contacted Timken right away since products with health and safety concerns, like bearings, are given top priority.

“Constable Gill asked if we could do some analysis—there were enough telltale signs—so we sent to the bearings to our manufacturing plant in St. Thomas, Ont., that has a lab,” Boere says.

The bearing conformed to Timken standards in terms of dimensions and surface hardness and weight, but had severe scoring on the raceway due to poor workmanship. Timken proceeded to analyze the material at its metallurgical lab located at its Canton, Ohio headquarters, and discovered the metallurgy and heat treatment were incorrect.

Made in China

Tracking down the perpetrator, however, is challenging.

“That gets a little difficult,” he says. “It’s very difficult to determine the manufacturing source but they came in from China.”

“We have to do it ourselves,” explains Daniel J. Szoch, program manager at Timken in Canton. Szoch heads up the company’s global anti-counterfeiting operations. The authorities in China usually don’t take the lead in these investigations, he explains. The onus is on the manufacturer to track down the guilty party and point the authorities in the right direction. It can be costly and time consuming.

This was the second time in the past year Timken had been notified of counterfeit bearings entering Canada. The previous fakes were also Chinese-made.

“We received a phone call from one of our distributors saying they had unknowingly purchased a bearing from a source they thought was trustworthy,” Boere says. The source, a surplus house, shared the name of its supplier in China.

“We tried tracking them down but we weren’t successful,” Boere says.

In this last case, there were only six bearings and all were destroyed, he notes.

“The products were marked as made in the USA but they came from China at a really fantastic lead price. It’s interesting with surplus houses because they deal with stuff that comes from all over the world, so I think they tend to turn a blind eye as to whether the product could be counterfeit if the packaging looks close,” Boere says.

Identi-FAKE-ation

Border officials are the first line of defense against counterfeits and manufacturers have educated and continue to educate customs officials around the world on how to spot fakes. Timken’s Boere says he has conducted education sessions for Canadian customs officers and it looks like the efforts have paid off. Scott Lynch, executive director of the American Bearing Manufacturers Association (ABMA), says raising awareness is the first step to keeping fake bearings off the market.

Yet, officials don’t have time to thoroughly check every shipment and even then, fakes would still slip through the cracks. Lynch says Chinese officials have seized 2.2 million bearings, and a raid in Long Beach, Calif., in 2011 unearthed 750,000 fakes mimicking four different brands.

Szoch says they also work with customs officials around the world to heighten awareness about fake bearings, and to try to calculate the amount of counterfeit bearings passing through various countries. “They’ve been more than forthcoming in sharing that kind of information,” he notes.

Counterfeit bearings are unlikely to show up in the OEM supply chain because they purchase directly from the company, Szoch explains.

“This phenomenon has more of an impact on our aftermarket industrial distribution business,” he notes. 

Szoch says it’s the top-selling products that get copied. Counterfeit bearings are increasingly a problem worldwide but the prevalence in the Canadian market is unknown.

All buyers can do is make sure they purchase from authorized distributors and to notify the manufacturer directly if they suspect a product is counterfeit. 

“Given the nature of these activities, it is virtually impossible to quantify the magnitude of the problem, particularly vis-à-vis a particular manufacturer in a particular market,” says Ingalill Östman, senior vice-president, group communications and government relations at the SKF Group.

“Thankfully we have no reason to believe that this is a substantial or widespread issue in Canada,” she notes. “That being said, SKF Canada views even the rare instances of counterfeit products that have arisen in this country as serious.

Östman says SKF has worked with authorities in the limited number of circumstances when it has been necessary and would welcome further opportunities to work with border authorities.

“We understand there are customs measures that exist in other countries that are reasonably effective in detecting counterfeit shipments,” she explains. “SKF believes that Canadian law could be strengthened to better protect the borders and market against counterfeit products.”

A June 2012 report from the Canadian Intellectual Property Council, Counterfeiting in the Canadian Market: How do we stop it? , says Canadian border enforcement needs to be strengthened and an intellectual property (IP) crime task force created. As well, the report states customs officials need to be granted ex officio powers to intervene in the importation, exportation, shipment of counterfeit goods. As it stands now, customs officials can’t take action; that’s left up to the RCMP.

The Office of the United States Trade Representative (USTR) in its 2012 301 Report released in April agrees. It says Canada needs to increase powers for border officials and has placed the country on a priority watch list due to a poor track record of protecting intellectual property rights.

Buyer Beware
 
Health and safety concerns are the top reasons to be concerned about any counterfeit part, including bearings. 

In October, for example, the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA), issued a warning about counterfeit airbags circulating in the U.S. market that had either failed to deploy or unleashed shrapnel on the passengers and drivers in the vehicles.

RCMP says buyers need to consider the four P’s when making purchases. People can be easily fooled, even purchasers at your aftermarket supplier,

• Packaging: Examine the packaging for quality, spelling      errors, incorrect fonts, lack of the supplier’s standard security      measures, like Timken’s holograms, and incorrect barcodes. 
• Price: If the price is too good to be true, it probably      is. However, some counterfeiters do have the audacity to sell their shoddy      knock-offs at full-price.
• Product: Examine the product for signs of shoddy      manufacturing.
• Place: Be wary when purchasing online; ensure the dealer      is reputable. Most counterfeit auto parts come from China (redistributed once they make it to Dubai) but Taiwan,      India, Pakistan and Malaysia are also known to      ship fake auto parts, the Motor & Equipment Manufacturers Association      says in its 2008 report, Intellectual      Property: Protecting Valuable Assets in a Global Market.

In 1997, the U.S. estimated the worldwide counterfeit auto parts market at US$12 billion, with the U.S. market accounting for 25 per cent. In 2008, market research firm Frost & Sullivan estimated the market would reach US$45 million by 2011.

Just like in the U.S., Canadian auto parts imports from China are increasing. According to Statistics Canada, $662 million of imports of motor vehicle parts and accessories under the headings 87.01 to 87.05 from China entered the Canadian market between January and August of 2012. Total imports for those categories reached $910 million in 2011, up from $806 million in 2010 and $632 million in 2009.

In 2010, U.S. imports were up to US$90.9 billion, an increase of 44.3 per cent from 2009, according to the 2011 Industry Annual Assessment from the U.S. Department of Commerce’s Office of Transportation and Machinery.

The most counterfeited parts are those that most often need replacing, like brakes, brake linings, rotors, seals, air filters, oil filters and windshields, to name a few. With the impact these parts have on safety, the old expression “buyer beware” now sounds more like salient advice rather than a cliché when purchasing with aftermarket automotive parts.

 Rebecca Reid is a writer and editor with the Business Information Group, LP. She can be reached at rreid@canadianmanufacturing.com or 416-442-5600 ext. 3663.