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Reman Opportunities


8/15/2006
By Brian Cruickshank

Last month’s ARI story posed some questions about the reman business. This month, we take a look at reman’s future.
 


In last month’s issue Counterman published an article that chronicled one of the biggest stories in years: the unexpected Chapter 7 bankruptcy of American Remanufacturers, Inc. (ARI).

The article has gotten tremendous response from readers. I am grateful to those who lent me their expertise and perspective, including those I was unable to name in the story because of confidentiality agreements I had made with them.

Considering the nature of ARI’s business, it was impossible to talk about ARI’s demise without discussing the remanufacturing business itself. Indeed, ‘reman’ was, quite literally, ARI’s middle name. As the article pointed out, there were some significant market forces that have posed challenges to not only ARI, but the entire the reman business as well.

The ARI story was not, however, an exclusive treatise on reman’s challenges. Hardly. In the end, ARI’s demise was a result of many, many factors. Some of these factors were external; many were internal.

The article, though, brought up some realities that nearly everyone in the market is dealing with, namely the impact of new product, sourced from China and other developing economies. Several once-important reman product categories are among the first products to be affected by this off-shore competition. ARI’s own primary product line, reman CV axles, was unable to overcome these challenges as customers shifted to sourcing new product. Considering that these new products allowed distributors to eliminate core handling costs, the move to new product was an easy one. It was a move ARI was unable to counter.

These statements are not meant to insinuate that reman is in trouble, nor that all customers are migrating their reman lines to new product. There are plenty of successful remanufacturers in the industry that are meeting and overcoming these challenges. For distributors, reman remains an essential category.

And so, as a follow-up to the ARI story, we took a serious and objective look at the reman business. We wanted to know, in light of the ARI situation, how the market views reman product. We wanted to know what value distributors place on reman products as a part of their inventories. We wanted to know how remanufacturers themselves are addressing some of the challenges the reman business is experiencing. We wanted to know who (and which reman products) will survive. In short, we wanted a clear vision of reman’s future.

The result is this month's article, Redefining Reman. We hope it brings clarity to a rapidly changing reman market.















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