EVENT REPORT: The Rediscovery of Remanufacturing

Remanufacturing can pay multiple dividends to the aftermarket, to consumers and the environment, reported a panel at the Global Automotive Aftermarket Symposium.

Bill Gager, president of the Automotive Parts Rebuilders Association, said, “George Burns said that if you stay around long enough you’ll get rediscovered. I think that what remanufacturing has been doing for the past 75 years is getting rediscovered.

“We like to call remanufacturing the ultimate form of recycling, because you get reuse of the part three, four times or more.”

“It’s the right thing to do,” says Joe Felicelli, Delco-Remy America. He spoke at length about how cores are valued, and how they get readjusted. “There are some very simple dynamics going on in the industry. In the case of some of the remanufactured products, there is the potential difficulty of diagnosis of a problem that the technician is not necessarily prepared to fix.

“So, that shortage is reflected in our business as a more expensive cost of repair at the repair site.” Equipment and labor costs are driving up the cost of repair, but remanufacturing can address this. “It allows the technician to outsource his shop labor. This is particularly true of engines and transmissions. He can get a unit that he can just remove and replace. He gets better utilization of his day, so he gets a more cost-effective repair.”

Gord Fenwick, CEO and general manager, Fenwick Automotive Products, expanded on this point. “The range of products covers virtually every type of component, whether import or domestic, on-road or off-road. From as far back as the Model T, remanufacturers provide their customers with one-stop shopping.

“When you take even a single product line and figure that we have products that cover 50 years, think about how many makes and models there have been: hundreds of makes and thousands of models. We not only have the finished goods, we have the core and the exploded bill of goods that goes into that finished good. What does that mean? Remanufacturers are experts at handling proliferation. As the OEs continue their march toward parts proliferation–there is no doubt that they’re going to continue–we can actually counter that with consolidation. We have the interest of our customers at heart all the time, and we want to help them have fewer parts to stock and take up less shelf space as long as the fit and function is identical.”

He says that remanufacturing can provide parts that exceed OE specifications. “Reverse engineering can determine why a part failed, and then make changes to make sure it does not fail again.”

He described several examples of parts that have been improved as part of the remanufacturing process. He then related these processes to the remanufacturing value chain, and how quality standards have been adopted by the remanufacturing industry. “What does quality mean to the customer? To our customer, the consumer? Labor hours have increased dramatically over the years, and needless to say, no one wants to do the job twice. This is where the reman industry excels.”

Not surprisingly, Michael Cardone Jr., Cardone Industries, Inc., did not disagree. “Considering that 70% of the hard parts sold in the aftermarket are remanufactured, they offer opportunities that can not be ignored.

“With the increasing cost of energy, the reman value proposition is growing stronger every day.”

Remanufacturing, he says, is keeping pace with the technology changes sweeping the automotive industry. “(The cost of replacing technology) is one of the main reasons vehicles are being scrapped today.” Reman makes parts available at lower costs, extends the life of the vehicle, and reduces the cost of inventory, he says.

“It is notable to observe that reman automotive products sell for less than new, unlike many other remanufactured products. Not only does demand exist, but thinking and acting green has proven good for business.”

Cardone said that challenges remain for the remanufacturing industry. End of Life Vehicle Legislation in Europe–which makes car manufacturers responsible for the disposal of scrap cars–is expected to evolve into “end of part” legislation that will require the same of parts manufacturers. He urged attention to this matter before regulations are formed in North America. “We can’t afford to assume that we’re doing enough (recycling). We need to get actively involved in creating the legislation before it is created for us.”

Dave Deegan, owner of the Engine Lab in Tampa, Fla. and the 2000 president of the Automotive Repower Council, also presented. He told attendees of the challenge and opportunity facing the aftermarket regarding rebuilt, or remanufactured, engines. His presentation is covered in the Canadian Engine Rebuilder section of this issue.