To successfully compete with China and India, you must first dispense with the notion that either country is the “enemy.”

Our businesses must not run to Congress and turn to political means to stay ahead in today’s global marketplace, says Michael Cox, senior vice president and chief economist of the Federal Reserve Bank of Dallas.

“It doesn’t work,” he says. “It’s actually why Japan is in decline right now. They tried to solve the problem of competitiveness with imposing all kinds of restraints on their own industry and tried to stop change. You cannot stop change because the rest of the world is going to move on.”

There will never be a time in the future when the United States won’t face intense global competition. And India and China by all means represent formidable obstacles, along with other countries such as those in Eastern Europe emerging from Communism.

“India is ranked as the No. 1 outsourcing center for the world on the basis of their people skills and the availability of an English-speaking labor force,” says Cox, who adds that China has a labor force that’s five times the size of that in the United States.

But, the United States stands at an advantage because of our history and sophistication in workforce development. When looking at the composite makeup of Indian and Chinese work forces, they’re still behind. “I believe the problem is not that we’re outsourcing too many jobs in America,” claims Cox; rather, we’re not creating enough global entrepreneurs.

“The new competitors are not your neighbors down the street but your neighbors in India and China.” He stresses that the solution to this competition is for the U.S. workforce to emphasize its imagination and creativity, which are keys to innovation.

The drive for global profitable growth
José Maria Alapont, Federal-Mogul

Becoming a global industry is a goal the entire aftermarket is finding necessary as vehicles and parts from overseas inundate our nation, says José Maria Alapont, chairman, president and CEO of Federal-Mogul.
By 2015, China will have half of the middle-income consumers in the world. “It’s going to be the largest consumer market in the world, and not in 100 years, but in five to 10 years,” he explains.

The global automotive market will be producing and selling 76 million vehicles by 2010. The challenging news is that 89 percent of those vehicles (or 60 million) go to emerging countries, such as India and China, says Alapont.

“Worldwide production of vehicles in best-cost countries will be more than 50 percent,” he says. “That is reality. If you put all the global worldwide statistics together, the good news is that the market will go up to 76 million in only five years, but the challenging news for some is that five top manufacturers will grow their market share 14 percentage points. And another five will lose 9 percentage points. The good news for the first ones is that in the next five years they are going to grow 32 percent in volume. The not-so-good news for the others is that they will grow only 7 percent. The reality is the transportation market is growing, but only the best ones, only the global ones, will succeed and survive.”

Adapting to the changing automotive aftermarket: The supplier’s perspective
Moderator: Bob McKenna, MEMA
Panelists: Mike Howarth, KYB America LLC
Frank Ordoñez, Delphi
Al Stecklein, Gates
Gordon Ulsh, Exide

For auto parts makers, there has been and will continue to be intense pressure to reduce costs, develop innovative products and expand into new markets, says Bob McKenna, president and CEO of the Motor & Equipment Manufacturers Association (MEMA). This supplier panel looks at cutting non value-added services out of the supply chain.
Mike Howarth, senior VP of KYB America LLC, suggests that the margins available to manufacturers have shrunk significantly in the past 15 years, which poses a serious threat, especially as the industry becomes more global and as power and influence move within the chain.

A lot of symptoms are attacking the industry almost simultaneously, says Gordon Ulsh, president and CEO of Exide Technologies. He points to how the industry is financed — there are few traditional banking relationships these days — as well as to the speed of information and the demands it creates. “It puts more pressure on the various levels of service,” says Ulsh. His concern, along with the other panel members, is that collaboration must occur to make the industry leaner and more efficient.

The impact and legacy of leadership
John Passante, The Organizational Development Group

Mentoring is quickly becoming one of the most important goals of the aftermarket industry, and taking the time to recruit, manage and retain future leaders could make a world of difference.

John Passante, president and CEO of The Organizational Development Group, believes that creating a culture in which companies treat employees like their customers will benefit the aftermarket.

“If we can maximize the human element in the aftermarket industry, then we don’t have to worry about global competition,” says Passante. “I think we’ve all lost good employees because we didn’t give them feedback. And silence is not feedback.”

This feedback, Passante notes, is what will help current aftermarket leaders prime future leaders to run the industry, developing employees who have the passion needed to tackle the challenges we face today.

The myths and realities of automotive service and repair
Moderator: Ron Pyle, ASA
Panelists: Aaron Clements, C & C Automotive
John Cochrane, Cochrane Automotive
Denny Kahler, Kahler’s Werkstatt
Betty Jo Young, Young’s Automotive Center

People want to know how to fix broken cars or how to service cars properly. If we can provide that type of training, then the aftermarket can move forward, says John Cochrane of Cochrane Automotive. He adds, along with other members of the panel, that unfortunately, training that serves to provide true value is few and far in-between. Even referring to some of the aftermarket’s training as infomercials, he says technicians will only attend once.

Betty Jo Young, co-owner of Young’s Automotive Center, stresses the importance of having a good course description, adding that without one, it can be very difficult to get technicians to attend training clinics.
What’s key, however, isn’t just the technical training, say panelists, but the management training, since without it, their businesses cannot thrive.

Polk Aftermarket Inventory Efficiency Award
Mike Gingell, R. L. Polk & Co.

Product Information Exchange Standard (PIES) and the Automotive Aftermarket Industry Association Catalog Enhanced Standard (ACES) are vital for a successful inventory system, suggests Willi Alexander, president and COO of Parts Depot, who accepted a Polk Aftermarket Inventory Efficiency Award on behalf of his company.

This year’s entries ranged from innovative line review processes to the creation of efficient real-time inventory management tools, but only two companies, Parts Depot and Affinia, walked away with awards.
Polk designed the award to recognize leaders in the industry at the forefront of adopting inventory management solutions and to help educate and inspire others to tackle the industrywide problem.

A funny thing happened on the way to the eForum
Dennis Welvaert,
Dayco Products, LLC

Currently, the independent aftermarket is struggling to share data up and down the channel. This is because many of the trading partners have developed their own approach to handling data, and our systems are not able to effectively send and receive data without significant intermediary “translating” or human intervention, says Dennis Welvaert, president of Dayco’s North American Aftermarket division, who delivered an encore presentation of “A funny thing happened on the way to the eForum.”

He emphasizes the importance of enhanced line reviews and category management and their dependence on data. Welvaert says that as a result of attending the eForum two years ago, he “heard an update about the PARTnerShip Network and was suddenly struck by the savings that were available for my company in ban charges. I became aware that there was an entity called the Aftermarket Council on Electronic Commerce that was working to keep all aspects of the aftermarket up to speed on changing technologies, and I was particularly gratified to learn that they were diligently collaborating to eliminate redundancy between associations and prevent dueling standards.”

After immersing himself in that experience, he was more adept at understanding how technology was impacting the aftermarket and his company.

He says the philosophy behind industry standards is that direct communication can occur between trading partners without middlemen, fees or redundant human activity. All these can be eliminated if universal standards are adopted. “It is hard to believe in the 21st century that two companies doing business together are having such difficulty accomplishing this.”

Who needs marketing?
Moderator: Tom Marx, The Marx Group
Panelists: Willi Alexander, Parts Depot
Lisa Kranc, AutoZone
Bill Long, Proliance
Mario Recchia, WORLDPAC

The industry was given a challenge at this year’s Global Automotive Aftermarket Symposium: to spend its marketing dollars promoting the positive qualities of the technician community to their customers.

“The best use of dollars would recognize where the decisions are actually being made in the distribution channel,” states Willi Alexander, president and COO of Parts Depot. “The consumers don’t know what ASE (Automotive Service Excellence) is. So spend money in the independent repair segment so that we can help the independent installer present an image to the consumer that will bring those consumers in and give them the confidence to get their repairs done in the independent channel.”

Panelists note that consumers rarely make the decision on brand when they need a part replaced, so it’s more important for manufacturers to “brand” technicians as sophisticated professionals who can help the consumer.

“To the distributors and retailers in the room, I would say let’s put our guards down and let’s collaborate as an industry to get the total package put together for the independent repair segment,” continues Alexander.

This collaboration will be essential in the future, shares Bill Long, vice president of marketing for Proliance International, Inc. “The communications and relationship that consumers have had with their independent repair shops have been lost by gas-and-go motoring...(we have to) build programs that help drive motorists into places that are supported by the customers that serve them.”

Our marketplace runs the gamut, and marketing to these individual segments will be the future.

“Certainly, we do have segmentation in our marketplace, but the key is that if the marketing department is going to (market to a specific group), the rest of the organization has to work in sync with that,” explains Lisa Kranc, senior vice president of marketing for AutoZone. For example, their stores have wall-to-wall signage in Spanish to reach that market, but if the counterperson doesn’t speak Spanish, everyone loses.

Mario Recchia, vice president of marketing and business development for WORLDPAC, says specialization will be the marketing of the future. “We have to get a lot more granular in our marketing efforts. It’s niche markets that we have to go after, whether it’s ethnic, female, male, that sort of thing. That’s going to have to be a lot more detail oriented going forward.”

Outsourcing for success
Mark Paling, Alvarez & Marsal Business Consulting

It is clear that increased competition, continued cost pressures and industry consolidation have mandated a reexamination of basic business models in the aftermarket. So despite some of the negative connotations it’s brought with it, outsourcing should be looked to as an enabler, as it has become an unavoidable factor that holds the promise of significant business change, says Mark Paling, a director at Alvarez & Marsal Business Consulting.

Paling says the market’s maturity has evolved from tactical to transformation and is now becoming more strategic in nature. However, as much as outsourcing is becoming more prominent, corporate uncertainties and risks of failure are increasing, warns Paling, therefore, key steps should be followed to ensure success. “You must manage opportunities against risks and complexities,” says Paling, who adds that companies can start at the point of scale that best fits their needs today, as long as some strategic thinking is involved.

View from Wall Street
Jonathan Steinmetz, Morgan Stanley

Stable and reliable yet slow. This is the cautious yet optimistic view of the aftermarket from Wall Street.

“It’s still rough out there,” warns Jonathan Steinmetz, lead auto analyst at Morgan Stanley, who once again shared a Wall Street perspective at this year’s Global Symposium. He points to OEM woes, SKU proliferation, the need for more robust inventory management systems, vehicle complexity, raw material costs and gas prices as key issues.
However, he suggests there are still opportunities for the aftermarket to tap into, including the truck and SUV market and the increase in do-it-for-me service.

It’s time to decide
Derek Kaufman, C3 Network

Our industry needs to really take conserving every drop of oil seriously, suggests Derek Kaufman, president of C3 Network.
Although some belief exists that gas prices could plateau for a period of time, Kaufman notes it only takes one small catastrophe or national event to bump them up into another dollar range. “Regardless of which side you’re on, in the next 10 to 20 years, the likelihood that we’re going to have pricing pressures is a fact.”

Be Car Care Aware update
Jay Burkhart, Federal-Mogul
Ray Datt, AIA Canada

Jay Burkhart, chairman of the board for the Be Car Care Aware campaign and vice president of global marketing for Federal-Mogul, emphasizes that one of the goals as the industry becomes more engaged is to solidify the key point of dialogue between consumers and counterstaff or repair technicians.

“The necessary dialogue doesn’t often occur,” he says, and is one reason the Car Care Council Executive Board undertook a major initiative to create an aftermarket Car Care Guide. Burkhart says it’s critical that the industry gets the messaging clearly and consistently as a sector to help consumers feel more comfortable, “especially against the backdrop of the perceived notion that going to the OE dealer is the better experience.”

Distribution leaders panel
Moderator: Kathleen Schmatz, AAIA
Panelists: Robert Blair, CARQUEST
Jacques Landreville, Uni-Select
Rollie Olson, Parts Depot
Mike Schultz, Federated Auto Parts

Concerns over the state of the supplier industry run rampant and couldn’t have been more apparent than during the panel discussion among key leaders in aftermarket distribution.

“Cataloging is something we could not do without,” says Jacques Landreville, president and CEO of Uni-Select. “Warranties are something we cannot work without, (and) sales force is becoming a critical ingredient.”

“Our biggest fear is the abandonment of the sales force,” adds Mike Schultz, co-president of Federated Auto Parts.

Rollie Olson of Parts Depot suggests, however, that many of today’s manufacturers are suffering from self-inflicted wounds, and some have even let their brands become a commodity.