Over The Counter: September 2004

Ontario Government Announces Apprenticeship Initiatives

In what Canada’s national automotive aftermarket association calls “a great step forward,” Ontario’s Liberal government has announced initiatives designed to bolster participation in apprenticeship programs.

The province announced three apprenticeship programs designed to move more young people into skilled trades, Mary Anne Chambers, minister of training, colleges and universities, announced.

“Improving access to apprenticeship training strengthens our ability to respond to increasing demand for skilled workers and keeps our economy strong and competitive,” said Chambers.

“An Apprenticeship Training Tax Credit would be a cornerstone of our plan to increase both the quality and quantity of skilled labour, including tradespeople, in this province,” said Greg Sorbara, Ontario Minister of Finance. “Our investment in apprenticeship will address the expected wave of retirements in skilled trades, and help build a strong and prosperous economy.”

“The Automotive Industries Association of Canada views the Ontario government announcement of additional funding for apprenticeship training as a great step forward in addressing the issue of skilled trade shortages,” says Ray Datt, president of the association. “Skills development is a key element of the AIA’s mandate. In fact, we have a number of initiatives designed to promote and support the development of skilled trades within the industry, including a number of scholarships and a new CD-ROM that explains career opportunities to high school students. We were particularly pleased to see the announcement to allow businesses to take advantage of additional tax savings.”

As part of its program, the Ontario government has included the creation of 1,500 scholarships of $1,000 each to high school students who had quit school, then returned to complete high school and enter apprenticeships, and a $2,000 bonus for employers to encourage them to hire these young people into skilled trades. The three-pronged initiative also includes investing up to $6 million in 2004-05 to create new Co-op Diploma Apprenticeship Programs that will enable young people to train as apprentices in a specific trade while obtaining an associated college diploma. In addition, the government is developing an Apprenticeship Training Tax Credit that, if passed by the legislature, would provide refundable tax credits for employers on a portion of the salaries and wages paid to eligible apprentices.

The programs announced are part of the Ontario government’s four-year strategy for bolstering the training and apprenticeship system and will complement the annual investment of $11.7 million, by 2006-07, which will expand the number of people registered in apprenticeships to 26,000 by the following year.

Dealers Capture Increasing Share, While Independents Hold Their Own, says J.D. Power

Canadian automotive dealerships are becoming more successful at retaining service customers once the basic warranty period expires, though the independent sector appears to be holding its own, according to the J.D. Power and Associates 2004 Canadian Customer Commitment Study.

The study, which measures the service satisfaction and loyalty of owners of two- to 12-year-old vehicles, finds that dealerships now account for almost one-half (48%) of the service occasions on four- to seven-year-old vehicles-up from 41% in 1999. This gain has come at the expense of mass merchants (e.g., Canadian Tire, Sears, Costco and Wal-Mart) and auto specialists (e.g., Midas, Speedy, Mr. Muffler), which each lost a 1% share of service occasions in this segment since 2003.

“It’s mainly from there where the share has come, whereas in other categories they have maintained their share. The independents are still doing well and quick lubes are still doing okay,” says analyst Rohan Lobo.

The results revealed that even the most cost-competitive channels can suffer. “In our study one of the areas we look at is what motivates customers. Though people do say that price is a factor, a good experience comes out very strong; it is either number one or number two. Despite all the costs savings in the world, if you have a bad experience you still aren’t going to go back.”

Lobo says the “branded independents,” those who carry banners such as Firestone, Autopro, and Certi-Gard, are perennially the most successful at retaining customers.

“Independents are alive and well. The thing to remember is that the shift has come in four-to-seven-year-old vehicles. In the eight-to-12-year-old segment, the share is steady. Those owners are still probably the preserve of the mass marketer. The four-to-seven-year-old segment is aging but the dealerships are doing better at retaining the vehicle when it has just moved off warranty. The eight-, nine,- and 10-year-old vehicles are pretty much lost territory for them.”

The 2004 Canadian Customer Commitment Study is based on responses from 17,700 owners of two- to 12-year-old vehicles who were surveyed in December 2003 and April 2004.

ArvinMeritor May Sell Aftermarket Unit, According to Wall Street Analyst

Following up on rumours to the same effect, Reuters has reported that auto parts maker ArvinMeritor Inc. may follow the lead of two competitors and sell off its replacement parts business to focus on core assets.

More merger deals have been struck in the auto supply sector this year than in all of 2003 or 2002, Merrill Lynch analyst John Casesa said in a research report.

Those assets have largely been sold to financial buyers, and a divestiture by ArvinMeritor could bring the same bidders to the table again, a source in the auto industry said.

“Given the pickup in transaction activity in the automotive supplier sector, and given the interest of at least two private equity firms in the automotive aftermarket, we believe it is not unlikely that ArvinMeritor will explore a divestiture of its light vehicle aftermarket business,” Casesa wrote.

Private equity firms Carlyle Group and Cypress Group have shown a significant interest in the aftermarket, he said. New York-based Cypress, which recently agreed to buy the aftermarket business of parts maker Dana Corp. for about $1.1 billion U.S., may be a front-runner in the case of an ArvinMeritor auction.

FAG Bearings Celebrates 50 Years in Canada

Recently, FAG Bearings celebrated its 50th anniversary of business in Canada with a ribbon cutting on the same spot as the Opening Ribbon Cutting Ceremony 50 years ago.

The FAG Bearings Automotive plant was built on farmland just east of Stratford, Ont., and opened in 1954. In 1963, the plant was doubled in size from the original 32,000 sq. ft., and by 1979 additions almost doubled the plant again. By 1990, a massive 260,000 sq. ft. doubled the workspace once more.

Overall, the company now employs more than 1,000 in Canada. The FAG Canada 50th Birthday celebrations went on all day and included the opening ceremonies, as well as games and activities and a BBQ lunch.

Popular Monroe Consumer Promotion Returns

One of the most popular consumer promotions in the 78-year history of the Monroe brand of shocks and struts will return this year, in a bid to help automotive service shops and their suppliers maximize ride control sales during the crucial autumn car care season.

The Tenneco Automotive launch of the 2004 “Return of Shocktober” promotion will provide consumers with a free premium Monroe shock or strut with their purchase of three qualifying units during September or October of this year. Monroe is supporting the promotion with an expanded array of Halloween-themed point-of-purchase materials, including colourful posters, counter stand-up easels, trade ads and banners. The promotion will also be supported with radio and television advertising. More than 17,000 service locations and 42,000 consumers took part in last year’s promotion.

Spectra Premium Concludes Acquisition of Trimag

Spectra Premium Industries, a North American manufacturer of automobile, light-truck and heavy-duty truck aftermarket
parts, has announced the conclusion of the acquisition of 90% of interest in Trimag L.P.

Investissement Qubec will own the other 10% of interest in Trimag. Trimag is a North American manufacturer of high-pressure die cast magnesium alloy parts used in the automotive industry, with approximately 150 employees, and has two plants covering a total surface of 140,000 sq. ft., one in Boisbriand, Quebec, which began operations in 2002, and the other in Haley, Ontario.

Fall Dates Announced For Accessory Installer Certification

The fall round of Specialty Equipment Market Association (SEMA) Installer Certification exams will be held on Tuesday, Nov. 9, in more than 700 locations around the United States and Canada. Registration closes on Wednesday, Sept. 22. Tests will be administered for Z1-Z4 accessory installation certification as well as for the newly implemented Custom Wheel & Tire Specialist Exam, known as Z5. Visit www.sema.org/certification or contact SEMA at 909/396-0289, ext. 158.

Automotive Parts Rebuilder Directory Released

The Automotive Parts Rebuilder Association 2004 Membership Directory has been published.

The directory features contact information for all APRA members and is divided into Rebuilders, Manufacturer Suppliers, Core Suppliers, Manufacturer’s Representatives, Warehouse, and Additional Associate Members. The 124-page directory is the definitive guide to the members of the automotive parts rebuilding/remanufacturing industry. The membership directory’s price is $900 U.S. For details on ordering, contact APRA at 703-968-2772, ext. 114 or olson@BuyReman.com.

Timken Upgrades Quality Certification

The Timken Company’s automotive group has been recommended for certification to ISO/TS 16949:2002. The company’s third party registrars made the recommendation after concluding their audits in June of 2004. The current recommendation to ISO/TS 16949:2002 applies to 21 of the 23 manufacturing locations for tapered, needle, and steering products worldwide, as well as the bearing business’ support locations in Canton, Ohio and Torrington, Conn. The remaining two facilities–Vierzon and Maromme, located near Paris, France–are currently registered to ISO/TS 16949:1999. The upgrade assessment to the 2002 version is scheduled for Fall 2004.