2004 Issue 4
Reman E-News

A Bi-Weekly Review For The Remanufacturing Community
A joint effort by The Remanufacturing Institute (TRI)
and the OEM Product-Services Institute (OPI)

Providing news for the $100B global remanufacturing community:
market trends, innovative offerings, government initiatives, acquisitions, expansions,
professional societies, trade groups, legal rulings, financial results, the environment,
productivity improvements, publications and events.

The Reman U Is Presenting In Las Vegas On October 28 & 29
Marketing Of Not-New Service Parts For Capital Goods Maintainers

US Annual Demand For Not-New Service Parts Is Estimated To Be $50B, Supporting An Installed Base Of Capital Goods, At Current Replacement Cost, Of $5,500B.  Learn How You Can Profitably Capture A Larger Share Of This Market ...with special emphasis on remanufactured parts.

How Will Your Organization Benefit From This Two-Day Seminar, If It Implements Many Of Its Practical Recommendations?

• Increase overall service parts gross profit margins by 3-5 percentage points, within 6 months
• Increase overall service parts revenues by 10%, within 12 months
• Provide increased customer satisfaction by offering multiple solutions for managing the productivity of the product maintenance process
• Reduce service parts total cost of issues
• Reduce service parts total investment
• Increase service parts availability
• Reduce warranty reserves by 20%, within 12 months
• …and more

This topic is of special interest to OEMs who have traditional shied away from not-new service parts. In today’s highly competitive world, if OEMs do not enter this market, they will lose an opportunity to obtain additional service parts profits from their investment in the design of a new product assembly.

For further info http://www.bigrshow.com/apics/MarketingNot-NewBrochure_04.pdf or call the Editor

Events
The APICS Remanufacturing & Service Parts (REMANSP) Special Interest Group (SIG) and “Reman U” of the The Remanufacturing Institute (TRI) are presenting a conference at the “International BigR Show” on October 28 through November 2 at the Riviera Hotel In Las Vegas. Information is available at http://www.bigrshow.com/apics/.

Benefits

• Courses developed by subject matter experts
• Courses delivered by instructors, each having over 20 years of reman experience
• Great value: prices $150-$400 for 1-day courses and $700-$900 for 2-day courses
• Ability to develop in-house courses
• Great network opportunities to meet fellow professionals from other industries

Awards
For the fourth consecutive year, Caterpillar is a member of the Dow Jones Sustainability World Index (DJSI World). The DJSI recognizes companies that lead their industries in corporate social responsibility. The annual review is based on a thorough assessment of more than 50 general as well as industry-specific criteria in each company's economic, environmental and social performance.

Launched in 1999, the Dow Jones Sustainability World Index is the first global index to track the financial performance of the leading sustainability-driven companies worldwide. The selection of index components listed and the rule-based process are available at http://www.sustainability-indexes.com
One of the drivers for Caterpillar’s selection was the expansion of their remanufacturing operations to Europe


European Automotive Not-New Parts Aftermarket
Legal, environmental, and economic requirements are forcing carmakers to find ways to recycle 85% of their vehicles, soon to be 95%, into raw materials and service parts. To meet these mandates, OEMs and suppliers are conducting expensive experiments with new materials and designs, which may pay off far in the future. But the Netherlands is already beating these standards today with only the aid of low-cost IT. Parts management, RFID, and supply chain vendors should help carmakers profitably retrieve cores and deliver remanufactured parts to meet EU environmental mandates. For further info visit the Forrester Research site at:  http://www.forrester.com/Research/ThankYou/PDF/0,2254,44289,00.pdf


Remanufacturers Woes In South Africa
Imports of used gasoline engines have led to the demise of the last major automobile engine remanufacturer in the country, with the loss of 100 jobs.

David Kopp, the managing director of Competition Motors, which was established 36 years ago, said this decision was taken because it was "taking serious pressure" from imported used engines, the majority from Japan and Malaysia, and changes to a large contract with motor manufacturer Nissan South Africa.

Kopp said that with the strength of the Rand, the South African currency, the latest engines could be imported at attractive prices, with an imported Toyota Corolla 1300 used engine costing 1,300 Rand (USD 200) compared with 5,500 Rand (USD 800) for a remanufactured engine.

In addition, he said Nissan SA decided it no longer wanted its factory to remanufacture engines and steered the work through its dealer network. The small dealers could not develop the economies of scale of an OEM, resulting in increased remanufacturing costs and in turn uncompetitive remanufactured engine prices.

Kopp said the firm used to remanufacture 1,200 engines a month, but a few months ago was only remanufacturing 290 engines a month. The closure of Competition Motors' operations followed the bankruptcy in recent years of Atlantis Diesel Engines and Reunert-owned Engine Plant.

Kopp had initially filed complaints with the government as to “unfair” imports as early as 1993 when the remanufactured engine market began experiencing competition with used engines. However, nothing was done because the used engines were regarded as a cheap source of engines for the country's taxi fleet. However, Kopp said 70 percent of the used engines imported at present were going into automobiles and only 30 percent into taxis, which meant the argument, was no longer valid. The government has chosen not to intercede in this matter.

A major source of used engines are from Japan where pollution control regulations are very strict, resulting in many relatively new engines being removed and finding new homes in nations with less demanding environmental laws.

There are a lot of old vehicles in South Africa and the owners can't afford their engine to be remanufactured or exchanged, so a low priced used engine is often a lifeline for these car owners.

Lesson Learned: When OEMs turn their back to the remanufacturing community, remanufactured costs can escalate and their strategic partners, such as distributors, can be financially adversely affected. Also if currency fluctuations and other market forces decrease demand for remanufactured products, OEMs should work with their strategic partners to ensure that the lost revenue streams are counterbalanced with, as in this case, used engine sales. Markets change, and in 5 years, there could be once again be demand for remanufactured products, but no domestic suppliers may exist to fulfill the demand.


Remanufacturing History
Howard Hughes was born in Houston, Texas, the son of a flamboyant oil wildcatter, Howard Hughes Sr. Four years, in 1909, after Hughes Junior’s birth, his father patented a rotary drill bit with 166 cutting edges that penetrated thick rock, revolutionizing oil drilling worldwide. Hughes Sr. and a partner formed what would become the Hughes Tool Company and began leasing the rotary bits to drillers for as much as $30,000 per well. They also bought up patents for other rock bits and devised new drills for the oil industry. To support their business model, they created a robust remanufacturing operation for their off-lease products. The Hughes family became very wealthy.
 

Join TRI
Only $50/yr to become a member. You get to have your name listed as a member, help to defray some of our costs in putting this newsletter together, help maintain the www.reman.org  web site and help support the Reman U. Contact the editor for further info.


Final Note
We encourage you to forward this newsletter to friends in the remanufacturing community. It is our intent to carry news on all industry sectors. If you have news to share or comments, please contact the Reman E-News editor:
 

Ron Giuntini

rgiuntini@oemservices.org
570.523.0992

Ron Giuntini, Executive Director
PO Box 48
Lewisburg, PA 17837
rgiuntini@reman.org
570.523.0992

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