A remanufacturing trade group’s perspective
Motor & Equipment Remanufacturers Association (MERA) (www.mera.org) is the remanufacturing and sustainability division of the Motor & Equipment Manufacturers Association (www.mema.org).
Just like passenger cars, commercial vehicles are in the midst of technological, regulatory and maintenance transformations that will have lasting effects on the marketplace. Some of these changes will create new opportunities. Others may necessitate creative solutions from fleets.
Due to the plodding outlook for future economic growth, which many institutions forecast at approximately 2 percent per year through 2020, fleets looking to grow above this benchmark may need to incorporate changes, such as assessing the value of various part replacement options, better manage downtime risks, anticipate government regulations and properly allocate repair technicians’ time to increase their current margins.
Upon interviewing executives at MERA member companies, it became clear that – with the right planning – fleets can utilize resources already in place to help cut costs, better manage technician repair times and decrease the downtime required for vehicles in a service bay. These solutions, which MERA sees as trending upward over the next five years, will be especially helpful if the economy underperforms or fleets find themselves struggling to cut expenses.
Trend No. 1: Commercial vehicle ownership periods lengthening.
On the horizon, MERA members see that as the demand for new OE (Original Equipment) commercial vehicles wanes over the course of 2017 and 2018, both fleets and independent operators will hold on to aging vehicles longer. With more miles on vehicles before new replacement, the need to perform regular maintenance and repairs will increase.
This is a cause concern because not only does the vehicle now require an investment in replacement parts, it requires additional non-revenue generating out-of-service time for additional maintenance and repair.
At this point, fleets and independent operators will have a decision to make in terms of what types of parts to put into a vehicle repair. By weighing the expected quality of a part against the cost of various replacement options – such as new, remanufactured, rebuilt or used – a fleet can determine a benefit-cost ratio for the value of each solution.
“A fleet or owner operator will always look for the most cost-effective solution that meets their expectation of quality,” says Henry Foxx, director of remanufactured products, Bendix Commercial Vehicle Systems (www.bendix.com) – a leading supplier of remanufactured brake shoes, valves, air dryers, compressors and electronics. “As fleet vehicles age, the value of a replacement part to the end-user is increased when it costs less, but performs the same as the original part.”
Therefore, it is important for fleets to keep in mind that only two replacement part options – new and remanufactured – go through an extensive standardized industrial process to produce parts that are fully warrantied. Whether through the OE or independent aftermarket channel, remanufactured parts are priced up to 30 percent less, on average, when compared to new.
This benefits fleets by reducing the money spent on replacement parts. Therefore, the ability to manage expenses, without taking a hit in quality, will become crucial to fleets as vehicles age.
Trend No. 2: Part replacement risks placed on suppliers.
As more maintenance is required, fleets will increasingly turn to parts suppliers who can offer the peace of mind that should any fault arise with a repair, a replacement under warranty will be handled expediently to reduce downtime.
In response, as the need to get quality parts in the hands of technicians continues to rise in the coming years, both OE dealer networks and independent channels are expanding to meet fleet demands. Since new and remanufactured parts are mass-produced, off-the-shelf solutions compared to rebuilt or used products, by servicing a vehicle with a new or remanufactured part, the responsibility to maintain a sufficient supply for warranty claims will correspondingly shift to the parts manufacturer.
Sherman Williams, director, remanufacturing and proprietary product development, Volvo Trucks North America (www.volvotrucks.us) – a manufacturer of heavy trucks and automotive engines – says that having authorized repair centers across North America, “allows us to meet the service needs and available parts demand of fleets across the country. By delivering replacements rapidly, the risk to the end-user in terms of downtime is minimized.”
Trend No. 3: Increasing material and technology costs due to regulation.
MERA members also see material costs for both new manufacturing and remanufacturing increasing as states and the federal government continue to implement “better brake laws,” restricting the use of certain materials, along with mandates for alternative powertrain systems in vehicles to meet emissions goals. These, and other regulations, could raise maintenance costs for fleets and independent operators as next-generation materials are used in place of traditional materials and processes.
Additionally, servicing these advanced systems will require additional technician training and experience, which could ultimately be passed along to the fleet.
However, Jay Pagano, general manager, Global Parts Network (www.globalpartsnetwork.com) – a provider of high-quality products and services to commercial vehicle fleet operators and independent repair operations – has a silver lining for fleets. “Costs for certain repairs may actually be reduced over time as more commercial vehicles come standard with air disc brakes and lightweight braking systems, such as those being produced by Bendix, Haldex, Meritor and others,” he says. “It will be interesting to see how these newer technologies impact the market.”
Additionally, MERA members believe regulations or laws regarding technology – such as Advanced Driver Assistance Systems, automated driving and platooning systems – may impact maintenance costs, should these items become standardized or required for commercial vehicles in the coming years.
Trend No. 4: Technician shortage and service time allocation.
MERA members project, like many other groups, a shortage of skilled service technicians. However, by implementing the use of different part options – like remanufactured products, instead of repairing or rebuilding a part at the service center, a technician of a lower level can rapidly install a part via swing-exchange.
This allows technicians to move efficiently from one service to the next, without sacrificing the quality of the repair or attention to detail. Fleets can then better assign technician schedules and produce the same amount of work with less labor.
By John Chalifoux
President & COO