Until the 1980s, counterfeiting was thought of as a victimless crime, conjuring up images of knock-off brand-name watches and handbags. Today, however, counterfeiting is big business, accounting for five to eight percent of all goods sold worldwide.
In terms of criminal activity, counterfeiting is among the most lucrative crimes today. Its impact on the global economy is estimated at $350 billion to $500 billion a year. In comparison, bank robberies account for less than $100 million per year globally. The Federal Bureau of Investigation has called counterfeiting "the crime of the 21st century."
The differences between real and fake products are getting harder to detect, causing serious financial and physical harm. Some of today's counterfeit products can easily escape detection by the naked eye with their look-a-like accuracy. Yet, while the appearance of counterfeit products has improved in some cases, they only approximate the original, with no regard for safety or quality standards.
Industry experts warn there is an increased possibility today that dangerous counterfeit products could appear unknowingly under the hood of the family car or on a fleet of trucks. According to CBS News, the auto industry has found enough different fake parts being sold in U.S. part stores to construct an entire car, with components such as brakes made of compressed grass and wood.
China is responsible for the exportation of 80 percent of the counterfeit goods seized at U.S. borders, but it's not the only country posing a problem. Others such as Taiwan, Hong Kong, Russia, India, Pakistan and Uruguay have also been reported as major producers and exporters of counterfeit goods.
Trade shows, among other places, have become a magnet for counterfeit products. At the 2004 Automotive Aftermarket Products Expo (AAPEX), a total of 24 cases of suspected intellectual property violations were examined, and in all, 17 patent violations and 10 trademark violations were discovered.
There were nearly 55,000 buyers at the 2004 AAPEX show. Had any of those buyers 'knowingly' placed an order for products that were either counterfeit or in violation of trademark or intellectual property rights, the penalties could have been severe.
According to Anthony Lupo, attorney at law firm Arent Fox, any purchaser of counterfeit goods may be held liable for selling counterfeit products if he knew or had reason to know the products were counterfeit. Lupo defines a "purchaser" as a distributor, retailer, wholesaler or installer.
"Resellers may be held liable for counterfeiting if they had knowledge or had reason to know that the products were counterfeit," Lupo said. "Knowledge can be demonstrated by several factors, including but not limited to, the quality, price and manner of distribution of the products and notification in the form of a cease and desist letter."
Lupo added 'knowledge' may be established through "willful blindness" where the reseller fails to inquire about the authenticity of the products for fear of what such an inquiry may yield. Once knowledge has been established, a reseller, such as a WD or jobber, may be held civilly and criminally liable for counterfeiting.
Civil damages can include special and statutory monetary damages and non-monetary relief. Courts can also issue preliminary injunctions, permanent injunctions, temporary restraining orders and seizure orders, and may order the freezing of assets, the attachment of property and the destruction of counterfeit goods.
Criminal penalties depend on the whether the accused is an individual or a corporation. For example, individuals who knowingly use a counterfeit mark on or in connection with goods or services may be fined up to $2 million and/or imprisoned for up to 10 years for a first offense.
The Motor & Equipment Manufacturers Association (MEMA) saw an opportunity to educate the aftermarket and heavy-duty industries about this critical issue. In response to the problem, MEMA in 2004 formed the Brand Protection Council (BPC) to help the association and its members address the issue and set priorities in the areas of counterfeiting, diversion, non-compliant products and intellectual property rights. The group has made impressive strides in its efforts to educate and communicate with the industry, media and government about the devastating impacts counterfeiting has in the automotive industry.
"This is certainly an issue that consumers should be aware of," said Paul Foley, vice president of the Automotive Aftermarket Suppliers Association (AASA), MEMA's aftermarket segment, which directs the BPC. "This has been a serious issue that has cost American manufacturers business and jobs both overseas and domestically, but now it is becoming a public safety issue."
MEMA and the BPC produced a supplemental publication on counterfeiting, which was distributed with the February issues of select Babcox magazines, including Counterman. The publication serves as a guide for WDs, stores, retailers and technicians in the aftermarket, as well as for parts distributors, fleet equipment and maintenance managers, and service providers in the heavy-duty market. The full-color, 16-page supplement includes a comprehensive overview of the issue of counterfeiting, a glossary of terms, a list of crucial industry and government contacts and step-by-step directions on what you can do if you suspect you've come across a counterfeit product or a copyright, trademark or intellectual property right violation.
Parts Plus Convention Hosts Members in 'The Big Easy'
Merged Group Typifies Changing Landscape in Distribution
New Orleans - Barely two weeks after the pre-Lenten Mardi Gras festivities had quieted here in the Crescent City, Memphis-based program group Parts Plus brought its own Fat Tuesday atmosphere to its national convention, held last month in New Orleans.
This year's convention, held February 24-27, marked a number of milestones for the group, including the addition of seven new WD members and record convention attendance among both members and vendors.
The most noteworthy announcement of the convention, however, was the group's first live acknowledgement of its recent merger with fellow program group Independent Auto Parts of America (IAPA), formerly based in Cartersville, GA. With the impending IAPA headquarters move to Memphis, the combined group is now known as Automotive Distribution Network (ADN), although each group will retain separate branding strategies.
Much has happened to the distribution landscape since Parts Plus last held its convention three years ago in Las Vegas. At Friday morning's general session, Parts Plus President and ADN Co-President Mike Lambert underscored this as he listed many of the positive advances Parts Plus has made over the last few years.
The fact that "ADN Co-President" - a title shared with IAPA President Mike Kamal - has been added to Lambert's rsum is illustrative of the changes that have been sweeping through distribution over the last several years. Indeed, the changes among program group members have been acute as of late, with Parts Depot's February announced merger with Tropical International and Uni-Select's recent purchase of MAWDI among the most recent examples.
What separates the Parts Depot and Uni-Select acquisitions from the laundry list of others is that these two major distributors have acquired WDs with memberships in other program groups. Both MAWDI and Tropical are members of IAPA, while their acquirers, Parts Depot and Uni-Select, are members of Aftermarket Auto Parts Alliance and Parts Plus, respectfully. It was the Uni-Select purchase of MAWDI that was one of the major drivers - if not the most influential motivator - behind the recent merger of Parts Plus and IAPA.
Following Lambert's comments, ADN Co-Chairman Steve Sattinger of Merle's Automotive described the merger's background and rationale, adding that because of the merger, ADN had joined what he called "the big four" of programmed distribution. The combined group certainly is more fortified; Sattinger cited the additional strength of the newly combined group: 51 members with an annual volume of $2 billion.
Wrapping up the Friday morning session, NFL Hall of Famer, current Redskins coach and NASCAR team owner Joe Gibbs entertained the capacity crowd with both pro football and auto racing anecdotes, while presenting his thoughts on success and the value of good personnel to any organization - professional sports or otherwise. Gibbs' presentation was courtesy of long-time Parts Plus vendor, WIX filters.
The rest of the four-day convention was filled with a day-and-a-half vendor's expo, as well as two days of Parts Plus University seminars that included training on such issues as jobber operations, customer service, financial information and marketing.
On Saturday morning, attendees were treated to a lively panel discussion moderated by Automotive Aftermarket Industry Association President and CEO Kathleen Schmatz. The panelists, Jack Cameron of The Timken Co.; Joe Pomaranski of Tenneco Automotive; John Washbish of Affinia Group and Bob Egan of Federal-Mogul, discussed many issues of importance to both Parts Plus distributors and auto care centers, including OE dealer competition, cataloging, data warehousing and the hoped-for passage of the Motor Vehicle Owner's Right to Repair Act.
The convention concluded on a Saturday evening with a reception, dinner vendor awards and post-dinner entertainment. More information on the Parts Plus vendor awards will be covered in a future issue of Counterman.
The Formation of "The Network"
Effective Jan. 1, a brand-new program group entity was established within aftermarket distribution - Automotive Distribution Network (ADN).
The final decision to join two of the market's groups, Independent Auto Parts of America (IAPA) and Parts Plus, was unanimously approved by Parts Plus' 36 members and IAPA's 16 members. Combined, the group is now 51-members strong, representing 242 warehouse locations. The combined volume of ADN is now more than $2 billion.
Following closely on the heels of this announcement was another program-group merger, this time between Pronto and the RPM Group.
A Program For Sales
Programmed Distribution Embraces National
by Susan Jones
Car Care Month Events
Most program groups would love a promotion that jump starts their spring business, increases loyalty among service providers and educates the consumer. That promotion already exists. April is National Car Care Month (NCCM), a month-long opportunity for the aftermarket to educate consumers about the benefits of performing scheduled maintenance and needed repairs. Several program groups already are reaping the benefits of NCCM by hosting hundreds of vehicle check-up events this spring.
One of the most enthusiastic participants is Steve Marks, senior vice president of marketing for Aftermarket Auto Parts Alliance.
For the past three years, using the Be Car Care Aware Campaign (BCCA), the automotive aftermarket has been making consumers aware of the vast number of vehicles that are in need of service due to underperformed maintenance. According to Marks, this year the Alliance will join forces with the industry with more than 300 free vehicle Check Lanes located throughout the country.
"The Alliance supports these events by encouraging our warehouse distributors to participate in this community activity," said Marks. "We put together customized kits for jobbers and shops who plan to become involved."
"Using the NCCM section of the Be Car Care Aware Web site and resources within their own organizations, National Car Care Month has been customized by several groups that have adopted it as their newest offering," said Rich White, executive director of the Car Care Council. White noted that many of the groups were inspired to take part after viewing a PowerPoint presentation (available at www.carcare.org) that explained why program groups and parts distributors should help their jobber, retailer and service provider customers host car check ups during National Car Care Month.
Mike Kamal, executive director of Independent Auto Parts of America, brought his group on board by creating 500 customized kits that include a National Car Care Month bay banner, a Be Car Care Aware Banner, educational brochures, Be Car Care Aware brochures, a countermat and posters.
"We're making the entire BCCA campaign one of our official program offerings for 2005," said Kamal. "For National Car Care Month, 50 of our top account reps will be using our customized NCCM kits to organize in-shop or in-store events with top service providers and retail stores. The campaign has created excellent, third-party consumer education materials."
The new, streamlined, in-house vehicle check ups are appealing because they make it easier for individual shops to participate in NCCM. While not as labor intensive or costly as a big event, in-house vehicle checks can create a double dose of loyalty as motorists become more devoted to the participating repair facility and service providers become more faithful to distributors and program groups that help organize the event. It's a hard-working promotion that won't break the bank, either.
National Pronto saw the potential and is taking part by promoting check lane events. Pronto will donate $5 per vehicle inspected to favorite local charities requested by approved, participating Pronto and VIP service centers. Pronto also is ordering and paying for all NCCM kits and Pronto Check Lane event kits for all participating service centers.
ACDelco has developed a marketing package aimed at helping customers reach consumers even before the April NCCM events.
"The package includes promotional items that will help participating distribution partners promote the Be Car Care Aware message, as well as the NCCM event in their local markets," said Garet Douglass, ACDelco merchandising specialist.
"The promotional kit provides participating installers with suggestions about how they can promote the event to local motorists. Their efforts, coupled with ACDelco support, will help raise consumer consciousness of service repair facilities that install ACDelco products, which, in turn, helps boost our customers' bottom line."
REASONS TO PARTICIPATE
Ready to Roll
Much of the work is already done for you in an on-line folder entitled, "National Car Care Month Car Check Ups Mean Business." This guide offers step-by-step instructions on how to host NCCM in-shop or in-store car check ups.
Often shops never see their reps unless the reps are in "selling mode." This event gives account reps or outside sales people a reason to call on customers to offer an altruistic program.
Assisting with this event positions the program group and member distributor as an organization that's truly interested in the individual repair facility, jobber and community.
Helping the repair facilities plan National Car Care Month events gives the account representative one-on-one time that can enhance the rep-customer relationship. Likewise, the service provider creates a similar dynamic by spending time with current and potential service/repair customers during the NCCM event.
Creating New Opportunities
Through National Car Care Month events, outside sales reps have an opportunity to assess other areas where the shop may need the company's assistance to strengthen the service provider's business.
Participating in the Be Car Care Aware consumer education campaign and National Car Care Month is as easy as clicking on campaign's Web site (www.carcare.org). This site contains all of the BCCA logos, downloadable brochures and the popular Service Interval Schedule to create your group's needed customized kit - including banners, educational materials, press releases, on-hold messages and more.
As an added value, each shop and store holding National Car Care Month car check ups will be listed in the national state-by-state roster posted on the Be Car Care Aware Web site. In 2004, this site was invaluable for media; they appreciated this free, public service event and often reported on car check ups in or near their communities. It's also an easy way to promote group members and help consumers who turn to this site seeking the nearest check up location.
The BCCA campaign has moved the awareness needle in the right direction, but statistics from the '04 National Car Care Month campaign continue to underscore the need for consumer education.
For more information visit www.carcare.org or call 240-333-1088.