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Opinions And Outlook From An Industry Veteran

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The following interview with Comp Cam’s Paul "Scooter" Brothers recently appeared on CPGNation.com. We have posted an excerpt of the story below. To view the original posting, please visit http://www.cpgnation.com/forum/scooter-brothers-opinions-outlooks-industry-veteran-3245.html.

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With Scooter Brothers’ outstanding automotive aftermarket credentials, we thought it would be fascinating to get his take on some current topics. So we
spoke with Brothers to get a “State of the Union” for the high
performance industry. We posed several wide ranging questions, and what
he had to say was say was both enlightening and challenging.

Q & A with Comp Cams’, Paul "Scooter" Brothers:

How will things currently taking shape in Washington affect the high performance industry?

I think it’s going to be a little tough go for a few years. My personal
opinion is that I feel the current administration is big on making
rules, policies and changes, but they’re not big on understanding what
effects these changes have.

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From where I sit looking at ways to adapt to new technology I see many
obstacles, but I also see an optimistic long term. Americans love their
cars. There are many clever people in our industry, and they’ll find
ways to improve on the power and performance of their cars. The cars
will be easier to deal with than the politicians. Emissions rulings and
fuel economy laws are likely to be more difficult to overcome. As an
industry, we’re going to have to accept these challenges and do our
part to elect local and national representatives who understand the
love we have for our cars.

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What is your view of the current state of economic affairs concerning the high-performance industry?

In a nutshell, it is challenging. Not only is the economy bad, that’s
something that stronger companies can typically over come, but the
problem we see now is that many of our normal customers have lost their
jobs or their income has shrunk to the point they have to really study
what their money is being spent on. All of which means that the
available money for products and services is very tight, and when money
is spent, it’s spent on the best products and value – and with
companies that give the most in customer service. To deal with this
situation companies have to change tactics.

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There are a number of companies that do business in different ways. For
instance, there is the company that is doing things the way they’ve
always done it and are waiting for things to get back to normal, like
it used to be. Those are the companies that are having real problems.
They’re shrinking; they continually do layoffs, they’re cutting
inventory, stopping their R&D and cutting back or discontinuing
advertising. That environment makes decline and failure a
self-fulfilling prophesy, and companies like this are drying up and
dying.

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On the other hand there are companies like COMP® that have done things
differently. For instance, we did not decrease our ad budget, and we
have actually increased our R&D budget. We have found ways to
increase our product offerings, which feeds our goal for growth.

We have actually been able to sustain some growth throughout this
situation. The growth we’ve seen is not necessarily on some of the
older products, but a lot of the products are new ones we’ve done more
recently. In some cases we have taken business away from some of our
competitors, and in other cases we have actually grown a new market
where one did not exist before. We’ve also maintained a good inventory.
That enables us to help our customers remain healthy and not be
burdened with huge inventories on their shelves. So we have done some
things a little differently than a lot of other companies, and I think
that puts us in a good and strong position and has helped us have a
good year, even in the middle of all this economic mess.

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What is your take on where the market is going and what actions should be taken to successfully move into the future?

How we move into the future is going to require us to think in a
different manner than we ever have before. If you look at a new car
today, and think of it as a car that will ultimately be the ’69 Camaro
or the ’57 Chevy of the future, then you have to embrace the technology
and develop a completely new type of parts. The complexity of the new
car is incredible compared to the cars of previous generations. So the
companies that still want to make parts for the ‘69 Camaro only, and
forget about the future cars, are going to be the companies that will
have a tough time. Maybe not today, or next year, but the further in
time we go, the more the scale tips in favor of the new technology.

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If you look at the new products I referred to earlier, almost all of
them have to do with the newer style engines on the market. – the ones
that came to the market in the mid to late 90s – the GM Gen III, Ford
Modular and the New Chrysler Hemi engines. Basically, all these engines
are reborn models using the newer style technology; that’s what we use
as the platform for products going into the future. We still will
support the older parts but we are concentrating on the new ones
because we are betting on the future instead of the past. That’s going
to be how COMP® moves into the new age.

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You have referred to technology being the key going into the future.
How does that thought translate into what future engines will look like
for the consumer?

Going from this point forward, we will see our friends in Washington
playing more of a role in things like CAFE rules going up and the
emissions laws getting tighter. I think the requirement will be 35.5
average fuel economy by 2016 and an 80% reduction in emissions by 2050.
When those things happen we are challenged to either have much smaller,
more efficient engines or something magic is going to have to happen.
But more importantly the key to this is to have more performance per
liter or cubic inch, and do it cleaner, which plays right into our
world because that’s what we’ve been doing is getting more power and
performance out of engines. The moral of this story is that the rules
are constantly changing, and the approach of any successful company
must be to change to accept accordingly.

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So I think the trend we will see is a swing toward much smaller
engines. Maybe not V-6 or 4 cylinder. I think we are going to see some
very small V-8 engines. The Ford Modular of today is a 4.6 L which is
280 cubic inch, so I won’t be surprised that within the next couple of
years we will see some 200 or 220 cubic inch V-8s. The reason I think
that is that the V-8 –as opposed to a 4 or 6 cylinder – is smoother and
makes more torque and seems to be a better fit for the American market.

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That’s another very important point. The American market is different
from the European and Asian market. Americans grew up loving their cars
and loving the power they make. The European market grew up loving a
nice car to drive, and the Asian market is just now growing up.

The American market has a tough time veering off the high horsepower,
bigger vehicles, so I think that trend will continue. I just think, as
we adapt, we will see the engines shrink. That will make advanced turbo
charging and super charging a big deal; it will make variable valve
timing and cylinder deactivation a big deal. Engines will be more of an
active engine rather than a passive engine.

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Based
on the thought that engines will shrink yet stay powerful, are you
talking about engine optimization through the higher use of
electronics?

Absolutely, you see it now. I just read an article about Corvettes. It
posed the thought that future Corvettes may have to go to a V-6 to get
better gas mileage. But the GM folks said not necessarily, because they
feel like they can get to the same place not so much by using smaller
engines, but by decreasing the parasitic power losses. They think that
up to a half a mile a gallon may be saved with electronic power
steering for example.

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So when you start adding up a lot of things that can give better
mileage like that, no one should be surprised that electronics are
certainly a key to better mileage and performance. We all grew up with
a big fan belt running an alternator, water pump, power steering pump
and an air conditioning compressor – that’s all going to be electronic
or electric that will save fuel and provide more horsepower.

So the move to more advanced electronics is a large trend moving into the future?

Yes. And it’s not later, it’s now. I think all you have to do is go to
a parking lot and raise the hood of any late model car. You’re going to
see an incredible wiring harness. Forty years ago you’d look at a
harness and it had 6 or 7 wires. If you had a roll of tape and a screw
driver you could fix anything. Today you have to have a laptop to plug
in to fix things. So there’s no question that electronics is driving
the basic platform that we all need to showcase our parts.

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You take Comp Cams®, we make camshafts. But in the bigger picture we
tell the valve when to open and close. Today we do it with a camshaft,
lifter and rocker arm. Sometime in the future we’re going to be doing
it with a laptop and a solenoid.

We’re going to have to make solenoids that are strong and can withstand
more pressure, solenoids that are quicker and go to higher engine
speeds. Then we’ll have to do the programming that tells it when to do
it. So when we walk into the warehouse in twenty years and look at what
we have on the shelf it probably won’t look anything like it does
today. There will be new things and we’ll all get a good laugh about
how we were dumb enough to make cams and lifters back in 2010. It will
be like us taking a look at a Stanley Steamer warehouse today.

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Is the future is already here?

Yes. As the person at the helm of COMP® R&D, I recognized quite a
few years ago that electronics were quickly becoming the future of the
whole marketplace. We had to develop or somehow obtain a platform to
carry us into that era. We started hiring a couple of people, then we
acquired FAST™ from Federal Mogul, and that gave us a solid toehold in
that market.

Since then, we have developed a lot of new products, but we learned (A)
how little we knew about electronics, and (B) how exciting it is and
how much we can do if we just have an open mind going into it and not
be fearful of not doing things the old ways. We had to embrace the fact
that times have changed and we had to figure out a new way to the
future. It has really allowed us to stay ahead of the curve and do some
good stuff.

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In
your role as Chairman Elect for SEMA how will you and other leaders go
about setting the agenda for members as we move into the future?

We all will have to look into the future to develop a vision of what it
will take to navigate through the threats and technology changes I
spoke of earlier. You have to develop a vision relative to the industry
and how you’re going to move forward. Many of the individual SEMA
members must accept the fact that it’s no longer 1968. We have to
really, really work hard, and my Chairmanship in the SEMA organization
is going to concentrate on trying to make a lot of these companies
understand the importance of reinventing themselves to make it in 2010
and well beyond. I also want to focus on delivering even more value to
SEMA members.

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One last question, how did you get the nick name of Scooter?

I got it from the nurses at the hospital where I was born. They thought
I was impatient because apparently I would scoot around the crib, so
they called me “Scooter” and it stuck. There is some irony about this,
because it maybe was foretelling that even to this day I’m not one to
be content or complacent. I guess I’m forever impatient from a progress
point of view.

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