Sometimes we need to exceed even our own expectations. That’s the message from Jim Ormsby, incoming Production Engine Remanufacturers Assoc-iation (PERA) president and current general manager of Franklin Power Products, a production engine remanufacturer (PER) located in Franklin, IN.
They’re words that all PERA members should take to heart if they wish to re-energize shrinking margins and profits. Yet don’t think for a second that Ormsby’s industry forecast calls for doom and gloom. To the contrary, sunny skies lie just ahead for those PERs that can embrace change as a means to an end.
"To increase profits, you absolutely must focus your efforts on change," Ormsby emphasized. Keep in mind that the real mission is, and always has been, to be successful by providing quality products to your customers that they can’t find anywhere else. You can’t possibly reach this level without constantly implementing change."
This simple formula comes from an industry veteran who started out at a Ford Motor Company dealership in 1984 as a mechanic, service writer, dispatcher and shop foreman. Ormsby then moved to Carrollton, TX-based AER Manufacturing, a Ford Authorized Engine Rebuilder, as a warranty technician.
"It was great experience because as I processed claims and fielded technical calls, I got to see, firsthand, most of the issues that were confronting our industry," Ormsby related. As the business grew by leaps and bounds, more facilities were added and Ormsby’s role increased to that of operations manager. "I was with AER Manufacturing for 14 years and had the privilege to learn from some of our industry’s best leaders including Bob McGraw (president of AER) and Ray Fink (vice president of AER)."
Today with Franklin Power Products, a PER that deals exclusively with Navistar diesel and gasoline engines, Ormsby is still pushing the envelope and is cautiously excited about the direction the industry is headed as the new millennium approaches. "First and foremost, I believe that any company, big or small, can prosper if they have a plan. As incoming PERA chairman, my first priority is to outline objectives for the association and the role we will play on behalf of our members."
Ormsby went on to stress again that change is the biggest issue of the day. "There’s this belief that certain factors are only affecting our industry," Ormsby said. "Ever changing customer requirements and needs will not only drive our industry, but all industries. This is a customer-oriented world that we live in. If any one of us fails to meet and exceed our customers’ expectations someone else stands ready and able to fill the void."
When asked about the role that OEMs will play in the future, Ormsby said that they will continue to grow without question. "Let’s not forget that these folks designed, built and serviced everything before we came into the picture. Today, the OEMs have realized a huge financial gain by replacing major service and warranty engines with reman engines. So sure, they’ll continue to control the core and other items as well. Once they’ve made the commitment like Ford has, they’ll only get better. It wouldn’t surprise me to see the dealerships add separate, non-warranty (engine) installation shops someday. It only makes sense."
This isn’t necessarily bad news for PERs according to Ormsby. In fact, the climate of business with OEMs involves more sharing than ever before. In terms of technology, training and equipment, Ormsby sees that OEMs will share all with PERs – provided they’re one of the handful of remans they do business with.
On the issue of industry consolidation, Ormsby sees a positive side even though many industry insiders have predicted the number of profitable PERs in the next five years will fall significantly. "I’ll take you back again to that ‘c’ word," Ormsby said. "Can the big remans ‘change’ fast enough to satisfy their customers? Only time will tell."
Ormsby did agree that consolidation will affect everyone in the pipeline, including parts and equipment suppliers. "There’s a very high probability that supplier consolidation could eliminate some options for remans in terms of being able to purchase parts or equipment from the most competitive supplier. The fear, as in any business segment, is that with a lack of competition, who’s going to keep the prices in check? There certainly are quality issues as well."
Speaking of quality, Ormsby predicts that at some point, reman customers will demand that remans as a group, adopt a set of rules by which to live. Although that standard right now is QS-9000, Ormsby noted that not everyone is willing to participate. This will be yet another issue on Ormsby’s plate when he takes on the responsibilities as PERA president later this year at the PERA Convention in San Diego, CA, November 2-5.
Finally, in terms of training and employment, Ormsby echoed the thoughts of most everyone in the rebuilding industry. "I think it’s safe to say that everyone is spending more time and money training not only new employees, but existing ones as well. Once again, we’re not alone, though. The healthy business climate across the nation has left a shortage of good employees across the board."
These are just some of the issues and opportunities that incoming PERA President, Jim Ormsby thinks about when riding his Harley Davidson motorcycle on long summer nights. An open road and a powerful engine humming in the background – that’s one way to keep things simple.
Note From The President’s Wife: "I can only hope that in my husband’s quest to bring the association into the new century, that he, too, will be forced to consider quality issues and change at home. I am still waiting for him to meet, let alone exceed my expectations. Unfortunately, "the only thing hard is keeping it simple" does not always apply at home. As soon as he complies with the families’ quality specifications, we will certify him for more Harley enjoyment."