Auto Service World
Feature   December 1, 2002   by Auto Service World

Over the Counter: December 2002

NAPA Canada To Supply Canadian Tire With Hard Parts

In a move that is sure to cause some surprise in the Canadian aftermarket, NAPA Canada has signed a five-year supply and technology agreement with Canadian Tire Corporation.

The arrangement will result in NAPA Canada supplying Canadian Tire stores with emergency parts and automotive products it does not normally keep in stock. Parts represented in this agreement make up approximately 15 percent of Canadian Tire’s total automotive hard part sales.

The supply agreement with NAPA Canada supports a comprehensive strategy in place at Canadian Tire Retail (CTR) to accelerate growth and performance in its key automotive business.

It comes on the heels of NAPA’s new retail/wholesale rebranding strategy, announced earlier this year, that was specifically set out by company president Larry Samuelson as a way to fight Canadian Tire’s success at the retail level.

This latest agreement will help enable Canadian Tire to focus its internal distribution capabilities on its high volume parts and leverage NAPA’s distribution infrastructure. This will result in significantly reduced infrastructure costs and improved product delivery time to Canadian Tire stores, while also expanding the range of products available to its customers.

The two organizations have also signed a related technology agreement for parts ordering, automated inventory tools, and other associated technology that will expand the range of products and service available to Canadian Tire customers.

“NAPA Canada is uniquely positioned to partner with Canadian Tire as a key automotive supplier. This agreement leverages our strengths, including 604 Corporate and Associate NAPA Auto Parts Stores, supported by the strongest supply chain in the Canadian automotive aftermarket with more than 200,000 part numbers available. It also fits very well with all of our internal strategic initiatives while providing significant volume to our network,” said Larry Samuelson, president, NAPA Canada.

This agreement will be phased in over the next year to year and a half. Implementation will begin in the first quarter of 2003 and the majority of the implementation is to be completed by the end of 2003.

Because of this phased approach, the benefits from the agreement are expected to be neutral to Canadian Tire’s earnings in 2003, but will contribute incremental annualized earnings before taxes in the range of $10 million to $12 million beginning in 2004. Implementation, as well as technology and infrastructure changes required to support the agreement, will result in a one-time restructuring charge before taxes of approximately $6 million to $7 million in the fourth quarter of 2002. Notwithstanding the restructuring charge, because of an improvement in Canadian Tire’s effective tax rate for 2002, Canadian Tire confirms its earnings forecast for 2002 in the range of $2.42 to $2.47 per share.

AutoServiceWorld and Automotive Aftermarket E-Learning Centre Team Up to Offer On-Line Business Training

The Automotive Group of the Business Information Group, parent of AutoServiceWorld and the leading automotive business publications in Canada, including this one, has announced a strategic alliance with the Automotive Aftermarket E-Learning Centre.

AAEC (Automotive Aftermarket E-Learning Centre Ltd.) provides on-line professional business and financial management training for independent garage owners, shop managers, and service writers.

“While nothing can replace live classroom training, in the real world you cannot physically be in class every day,” says AAEC founder Robert Greenwood. “But you do need the right tools and support at your fingertips. This site provides a learning and support environment in 10 and 15 minute segments.”

The AAEC course takes elements of Greenwood’s proven classroom training sessions and packages them into an easy to navigate on-line format. The site is interactive, uses voice-over techniques, and allows access to proven, industry specific, business financial information, delivered in a format that is easily understood and accessible around the clock.

“At The Automotive Group, we see this as a logical extension of our longstanding relationship with Bob Greenwood. He has provided our readers at the jobber and independent repair level with valuable information for years now, and this is another way we can help him deliver his profitability message to the entire automotive aftermarket,” says John MacPherson, senior publisher at The Auto-motive Group.

“We are particularly pleased to be able to offer readers of AutoServiceWorld, Jobber News Magazine, and Service Station and Garage Management a special discount of $100 off the annual fee,” says AutoServiceWorld content manager Andrew Ross. “All any automotive professional has to do to qualify for the annual discount is visit AutoServiceWorld, click on the AAEC link, and use the password ‘ASWPRO’ when prompted at the registration page. It will easily pay for itself, over and over again, whether you own an independent repair business or a jobber store and want to understand your customers’ business better.”

AIA President Ray Datt Receives Prestigious Education Award

Automotive Industries Association of Canada president Ray Datt has been awarded the Northwood University Automotive Aftermarket Education Award for 2002.

The award, presented during the Auto-motive Aftermarket Products Exposition (AAPEX) in Las Vegas, honors individuals in the automotive aftermarket field who have made noteworthy contributions to education, public or private, on any level, inside or outside of the industry.

Datt believes that learning is a life-long activity. “The success of the aftermarket is dependent upon the continuous learning cycle and the professionalism it breeds,” says Datt. “I am honoured to receive this award and accept it on behalf of the next generation of aftermarketers.”

Datt joined AIA as president in 1998. Under his leadership, education has become a primary focus area for the association. AIA’s mandate is to promote, educate, and represent members in all areas that impact the growth and prosperity of the industry. With regards to the education portion of the mandate, AIA endeavors to educate members and their customers on the importance of continuous training and improvements in business.

Northwood University is a private business and management university with residential campuses across the U.S., additional program centres and a distance education online program, and several international study programs.

Federal-Mogul Opens Brake Technology Centre

Federal-Mogul Corporation has officially opened a state-of-the-art technical centre devoted to researching, developing, and testing advanced automotive brake pads and linings.

The new Friction Products Technical Center, in Plymouth, Mich., is equipped with sophisticated analytical and test equipment. It becomes Federal-Mogul’s North American “center of excellence” for analyzing and preventing brake noise, vibration, and harshness (NVH) — historically a leading source of vehicle warranty issues for auto manufacturers. Several hundred customers, government officials, media representatives, company leaders and other employees attended a ribbon-cutting ceremony and open house at the 35,000-square-foot facility in the Plymouth Oaks Business Park.

Winnipeg Remanufacturer Purchases Edmonton Company

Autoline Products Ltd., based in Winnipeg, Man., has purchased all outstanding shares of Tarani Rebuilders, based in Edmonton, Alta.

Autoline is a remanufacturer of carburetors, distributors, multi-port fuel injectors, water pumps, calipers, and power steering pumps, while Tarani’s focus has been on constant velocity axles and rack and pinion steering units.

Tarani Rebuilders Inc. will continue to operate from its existing Edmonton location. Former Tarani president Dan Saskiw will remain as general manager for an interim period. Both parties see the transaction as a very positive step forward. Information from Autoline says that it will be business
as usual for all Tarani accounts, and Tarani products will be introduced to Autoline customers as programs are developed.

Uni-Select Reports Strong Third Quarter, Automotive Margins Down

Uni-Select’s financial results for the third quarter of 2002 show a strong increase in profits over the previous year, with significant growth occurring in its automotive segment.

Net profits increased by 21.0% to attain $5,856,000 or $0.32 per share compared to $4,840,000 or $0.27 per share in the previous year. Net profits for the nine-month period ended September 30, 2002 reached $14,550,000 or $0.81 per share compared to $11,458,000 and $0.64 per share during the course of the preceding year. Sales in the third quarter were $180,585,000, an increase of 10.8% compared to sales of $162,997,000 realized in the third quarter of 2001. Sales reached $508,877,000 for the nine-month period ended September 30, 2002, an increase of 7.6% compared to sales of $472 874,000 realized in 2001. All figures are in Canadian dollars.

Sales for Automotive Group Canada increased by 12.8% during the course of the third quarter to reach $128,925,000. Organic growth for the group was 1.2% when compared to the same number of days in the third quarter of 2001. The remainder of the growth is attributable to the joint venture created in the Prairies on February 1st with Acklands-Grainger Inc. offset, in part, by a change in the estimate of rebates earned by the company’s merchant members.

The third quarter also included an additional billing day when compared to the same period in 2001.

The operating margin of Auto-motive Group Canada in the third quarter was reported at 6.1%, down from 7.1% a year earlier, due to the lower margin on additional revenues of the new joint venture and related non-recurring integration expenses, bad debt charges, and expenses related to the implementation of the warehouse management system.

Monk McQueens Western Automotive Aftermarket Golf Tournament

The Monk McQueens Western Automotive Aftermarket Invitational golf tournament, held in B.C., attracted 156 participants and raised nearly $60,000 for the five charities supported by the annual event. Benefiting from the generosity of the many sponsors and golfers from across Canada were: Boys & Girls Club of Greater Vancouver; Cerebral Palsy of B.C.; Canadian Cancer Society – Prostate Unit; B.C. Lung Association; and the Syd Vernon Foundation.

It was another successful year, says organizer Doug Coates, who sent particular thanks out to all who lent their support to these worthy causes.

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