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Made in China


7/10/2007
By Jon S. Owens

As the Foreign Tire Sales recall shows, distributors can shoulder more than they bargained for in their search for bargain-priced off-shore product.
 

By now, you’ve no doubt heard about the myriad of product recalls recently making news across many industries. The shortlist of problems includes tainted toothpaste, bad seafood, toxic pet food, leaded paint in children’s toys and, most recently, tires. All of these consumer problems share one glaring similarity: They’re all “Made in China.”

How bad is the problem? According to the U.S. Consumer Product Safety Commission, Chinese-made products have accounted for 60 percent of recalls this year. There’s no doubt that all these products can have significant impact on consumers. Just ask anyone with a pet. But for those of us in the aftermarket, perhaps none hits closer to home than this tire recall. It illustrates what can happen when a distributor puts misplaced faith in a manufacturer and the problems and associated liabilities that can arise when the sourced products fall short of safety standards.

Recently, U.S. regulators ordered Union, N.J., tire distributor Foreign Tire Sales to recall as many as 450,000 tires. The company reported to NHTSA in June that the treads might separate on light-truck radials manufactured by Chinese tire maker Hangzhou Zhongce Rubber Co. Foreign Tire Sales said many of the tires are missing a safety feature called a “gum strip,” which helps bind the belts of the tire to each other. The gum strip prevents tread separation, which can cause a tire to blow out, possibly causing a driver lose control of the vehicle and crash. The Chinese-made tires were sold under at least four brand names: Westlake, Compass, Telluride and YKS. Each brand is a “house” or distributor-owned brand. Think private-label, white box or value-line — all very familiar territories to all of us in the aftermarket parts business. Last August, two people were killed and a third seriously injured when a van equipped with the tires rolled over on a road outside Philadelphia. A wrongful-death lawsuit filed against Foreign Tire alleges that the tread on a Telluride-brand tire separated, causing the crash.

Once all of this came to light, NHTSA told Foreign Tire Sales that it — and not Hangzhou Zhongce Rubber Co. — was legally responsible for the recall of nearly 450,000 tires. In early July, the recall began and Foreign Tire Sales, which employs a mere 10 people, said it will continue the recall until it runs out of money. An attorney for Foreign Tire Sales claimed the company could only afford about 10 percent of the recall costs.

This is an unmitigated disaster, and as aftermarket distributors in increasing numbers look to source directly from China, there are some valuable lessons to be learned. First, know who you’re doing business with and thoroughly understand your liabilities. If you decide to source directly from China, know what you’re getting your company into; there’s more to this than just finding a low-cost supplier and letting the increased margins roll in. Ask yourself if you really have the expertise to take on something of this magnitude. And if you do, are you willing to accept the ramifications if things don’t go as planned? Considering all the problems various industries are having, it doesn’t make sense to go into business with someone just to save a few points. It’s just not worth it. As distributors, you rely on those manufacturers you partner with to have the technological, design, engineering and R&D expertise to provide products that are safe and reliable. Your customers should expect no less, and neither should you. To do otherwise puts everyone at risk.













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