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Diesel Dialog: The Nature Of The Diesel Aftermarket Has Become Increasingly Competitive

By Johnny Bianchi

In recent years, the nature of the diesel aftermarket has become increasingly competitive. Many of the bread-and-butter engines that diesel shops have focused on have become so common that the factory replacement parts and reman engines available leave little profit to be made by the machine shop trying to stay competitive.

One important factor in this equation is the OEM's strategic positioning of their exchange programs - which have grown into a major source of competition - for both our industry and their own dealers. Let's face it, when the customer swings one of these engines, the machine shop and the local dealer or repair facility all lose the labor business and the parts sale, too.

This is all fair and well as long as we are playing on a level field that is being judged by the same set of standards. But, some manufacturers have clearly gone beyond good business and have breached their own integrity in this effort to gain a competitive advantage in the service and replacement parts field. I think it only fair to recognize these inconsistencies and respond to them in professional ways that strengthen the rebuilding industry. I'm not talking about the "Boston Tea Party" here!

For many of us, the OEM's rebuilding facilities are big accounts. But in many cases the factory service centers are the one's suffering from corporate policy. When the engine is swung at the authorized service center, all of its repair service providers are cut out of the picture.

More than one OE dealer representative has expressed concerns about their own factory exchange programs making parts swappers out of their experienced, factory trained technicians. Like any other group, the OEs can only be judged in terms of their own actions. In an effort to corner the service and aftermarket replacement parts, these marketing strategies are affecting the rebuilding industry and should be recognized.

To name a few examples of the types of tactics I'm referring to, you can start by opening a service manual. When the listed spec for new block deck height is .004" from the minimum acceptable deck height, or a head's "new minimum thickness" is equal to the "minimum acceptable thickness," there is no room to resurface.

Not that you can't machine these parts and negatively impact the engine's runability. But does the OEM make any notification to the buyer when it sells a factory exchange part with the factory warranty even though the part may be machined beyond their owned published tolerances? How about replacement bearings and pistons not offered in reasonable undersizes or oversizes, rendering the component useless after it's first go around. Or what about a manufacturer placing a "bounty" on cores in an attempt to control the value of the reman component by being a major supplier.

And how about service manuals that contain steps in a repair which are included to shield the manufacturer from liability, but in effect create additional time and equipment costs to repair the component "properly." Meanwhile, these practices are not even being followed in the factory's own rebuilding facility. These wasted costs drive the price of rebuilding the component up above the replacement price of the factory exchange part.
Some OEMs will not endorse technically sound repairs, yet evidence of the same repair is observed upon inspection of the factory replacement part. The examples just seem to go on and on, all pointing to the same result - to drive the costs of rebuilding well above the replacement costs of a factory exchange unit, while simultaneously maintaining the "security" in the customer's mind that they are receiving the "quality" represented by the factory name.

Far too few end-users are putting two and two together and seeing what is really going on. In some cases rebuilders play into this trap, hack away at price and leave quality, warranty coverage and profits behind. By doing this we compete against ourselves, guiding our businesses towards lost revenues, rather than focusing as an industry on the real issues.

So what can we do and how can we combat these tactics? First, we can develop and collectively recognize industry standards that are based in sound metallurgical facts. Acting in technically professional ways, we can educate our customers as to which repairs are durable and reliable, saving them down-time and money while at the same time supporting labor and sales for the local shops involved in the rebuilding industry. We also can continue to innovate and create sound repairs that work for the materials and the application at hand, being confident that we are providing our customers with quality products. The customer should make the choice about a repair option based on all the information. They should be accurately advised about the repair and its chances for success.

It is important that as a group we only recognize quality repairs. As these repairs are devised and proven to work, individually we need to be active in and consult with our national trade groups such as the Automotive Engine Rebuilders Association (AERA), Production Engine Remanufacturers Association (PERA), or standards boards such as the National Institute of Automotive Service Excellence (ASE), American Society of Testing and Materials (ASTM), or ISO, and share the lessons we learn to improve our products.

I know there are those who'll take issue with my views, but as an industry participant I have to ask myself, "What can I do to improve our industry's image?" When I read trade journals, I'm looking for insights into our industry and it's related markets. From this standpoint, I think it reasonable to examine these issues in an informed and active way, with the end goal of answering the question, "How can we make our businesses and our industry better?"