by Chirag Asaravala

Global economy, off-shoring, and free trade are all terms generating intense debate these days. While they seem to be the headaches of big auto manufacturers, dot-coms, and software companies, you might be surprised to learn that businesses in our own hobby are right in the mix of this economic evolution.

You need look no further than your own project car. More and more performance, restoration, and replacement parts are being produced in places like China, Mexico and the Phillipines. From bumpers to cylinder heads your project could contain just as many parts manufactured by foreign labor as those built by American workers. Is that necessarily a problem?

Bill Ford Jr. recently commented that is simply not realistic to manufacturer a new vehicle entirely in the United States. Various parts, from electronics to interior fabrics, must be sourced from overseas in order to take advantage of cheaper labor and materials pricing. This is often the only way a domestic company can produce the product the market wants at the price it is willing to bear.

The fact that American companies can source goods and services from all over the world is arguably the very definition of America's free market economy. While we may dislike the idea of products once sourced within our own borders that are now being purchased overseas, we have to respect that this is indeed what capitalism is all about. In the short term the loss of American blue collar jobs seems to be a problem, however, many economists and sociologists surmise that in the long run the net impact on American jobs will be nill. Factory workers who are displaced will be inclined to learn new skills. Today's iron worker may be tomorrow's CAD designer. Clearly a new breed of "blue collar" worker will evolve.

Real Issues
The globalization of America's supply chain is not free of some real challenges however. While many American companies legitimately use offshore resources to produce their products, there are a new crop of companies who use cheap labor and weak overseas regulations to gain what some say is an unethical, and often illegal, business advantage. Knock-off products and counterfeit goods are a very profitable business

Counterfeit auto parts being steam rolled in the Philippines.
because they come without R&D expenses and large overhead. While perhaps the notion of counterfeit goods brings up images of fake Rolex watches being crushed on a Manhattan street by a steam roller, the same tactics are now being used to make all sorts of performance automotive parts.

The distinction between counterfeit and knock-off, while often lumped into the same category of "fake", is actually fairly clear cut. A counterfeit product is one that is deliberately made to look and deceive the consumer. These are products that come packaged and labeled no differently than the original part. However the product is almost always made from inferior materials and far from original specifications. Be it watches or brake pads, the authentic companies and the consumer both suffer from counterfeiting.

The economic damages to the automotive aftermarket industry from counterfeiting are massive. MEMA estimated last year that US Companies such as Federal Mogul suffered $3 billion in lost revenue and costs associated with fighting counterfeiting. These products also pose a danger to the public. In Canada a bus carrying fifteen people plunged off a cliff as a result of the counterfeit brake linings made from sawdust. A mother and child died in Saudi Arabia when the counterfeit brake pads, made from compressed grass, failed to stop their car. The examples are countless and horrific.

The trade in counterfeit goods is a legal issue, one which the US and other countries have been tackling vigorously post 9/11. The Federal Government has established STOP (Strategy Targeting Organized Piracy) and the agency's website, http://stopfakes.gov, offers ways to report counterfeit products of all types, not just automotive. The automotive industry has also been successful at lobbying politicians to take action. Mike Rogers, a Michigan Congressmen, has made several powerful speeches on the lack of fair trade by countries such as China, who he feels have been turning a blind eye to counterfeit products being exported from their countries.

Knock-off products are a much harder problem to grasp. In fact, it isn't even agreed there is a problem. A knock-off product is one where a company reproduces the original company's product and sells it as their own. The company is not attempting to outwardly deceive the customer into thinking they are buying the original product, but is usually marketing the product as "the same as" or "equivalent to" at a substantially lower price. Often times the knock-off company will copy everything down to the part numbers and instructions, only changing the brand name to their own (see side bar.) These companies are banking on the prospect that consumers will be willing to pay less for something that appears to be just as good as the original.

Quite often with knock-offs the end user may not even be aware they have purchased a fake. In the case of automotive products distributors and jobbers make the situation murkier. A customer may drop a car off asking for a brand name electric fan. The jobber may instead order the cheaper knock-off fan and pocket a decent margin from the sale. He can even win the customer over by giving him a price lower than he was expecting to pay for the original.

These schemes work well until there is a problem with the knock-off. Often times the customer then calls the original company's techline, since he assumes his mechanic put in the original part. After some investigation and possibly shipping the item back under a warranty claim the company and the consumer both learn that his product is in fact not the real deal.

Companies like Flowmaster (shown) perform extensive R&D and testing on their products. Any defects are backed up by warranty, not often the case with the knock-off companies.

What are you paying for?
"Just because knock-off products look the same doesn't mean they are", comments Bill Tichenor of Holley Performance Products. They often are produced with inferior materials, sub-standard quality control, and often come with no support or warranty. Furthermore, the companies we talked to say the knock-off companies have no desire to support the enthusiast. You won't see them putting money into developing more products or supporting the hobby via racing programs or contingency money. Tichenor says about Holley, "We put significant profits back into contingency money to pay customers for using our products. Our carburetors are the ones winning every Sunday in Cup cars, not the knock-off versions."

Whether it is performance automotive parts or digital cameras, the knock-off business mentality is identical. These companies watch their respective markets for popular products then work with an overseas company to reproduce it. Since they haven't had to spend significant research and development costs, and are using cheaper labor and materials, the products can be produced for significantly less than the original. Most of this is passed on to the consumer, but they still make high margins. It's a tactic often termed as "last to market", and in many industries has turned the tables on the perceived leaders.

(Port Job continued)
In This Article:
FordMuscle takes an in-depth look at both sides of the debate over performance automotive parts produced, and often copied, overseas.

Pictured is a "PC6AL", a clear MSD 6AL knock-off brought to market by "Pro Comp Electronics". Pro Comp's knock-offs of MSD Ignition products, and many others, are often seen on eBay at half the cost of the original units. Whereas the original MSD box uses MIL-SPEC wire this one uses cheap copper wiring that will burn.

Even a trained eye can't tell which is the real Flex-a-Lite 5.0L fan and which is the knock-off. ProForm products produces the fan overseas and sells it for half the price as the original. Flex-a-Lite says their tech line ends up fielding calls from enthusiasts who didn't realize their shop sold them a ProForm product.

Shown are knock-off versions of Edelbrock's tremendously successful Victor. Jr. SBF heads. Cast in China by Pro Comp Electronics, they sell on eBay for $500 a pair, bare, under distributor names such as Hy-Flow, SuperFlow, and StrikeForce. We've seen the heads and they are fraught with quality problems.

Flowmaster picked up on their mufflers being knocked-off when units like the one above would show up at their facility for warranty claim. This is a cheap Mexican imitation being sold to exhaust shops looking to make a bigger cut when an unsuspecting customer asks for a set of Flow's. Flowmaster says to always make sure their name and patents are stamped into the case. These cheap knock-offs do not have the same structural design and will eventually fail as seen here.

While knock-off companies are not counterfeiting when misleading the
consumer into thinking they are buying an authentic product, they certainly are relying on the brand identity created by innovation leaders to increase sales. Here again is Pro Comp Electronics and a page from their catalog. The pump color designators are a direct rip off from Holley's fuel pump line.

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