Truck Parts and Service | Heavy Duty Trucking, Aftermarket, Service Info
Issue link: https://read.dmtmag.com/i/85612
Remanufacturing Update By Denise L. Rondini, Executive Editor drondini@randallreilly.com A Look At Differentials Vertical integration and technology are impacting remanufacturing. R emanufacturing is a vital part of the truck parts aſt ermarket. Truck Parts & Service has launched a year-long series on the subject of remanufacturing. Th is issue's install- ment contains an interview with Dave Olsen, CEO of TransAxle. TPS: What are the key issues im- pacting diff erential remanufacturing? Olsen: The differential is a critical part of transferring the energy from the transmission out to the wheel end. With that comes a lot of different ratios and gearing. What you ended up with is a lot of variety and a part number explo- sion over the last 10 years as fleets have tried to work to maximize fuel economy. This has put a lot of pressure on people that remanufacture to keep up with all those changes. Th e other thing you have is a lot of vertical integration. If you go back 20 years ago there were two to three principle players. Now you have a lot of vertical integration with Daimler doing their own thing and Paccar and Volvo doing their own thing and that has made for a much more diverse product off ering than what it used to be. Th e ramifi cation of that is there are fewer people remanufacturing. Where you used to have 12 choices in a market, you might have four or fi ve now. Th ere are more national players rather than regional or local players in that market, and that is a function of the product becoming more diverse. TPS: How does a reman diff erential fi t into a distributor's parts strategy? Olsen: We all are looking to be a 18 better more complete ser- vice to customers, so if you have customers who are looking to you as their parts solution, cer- tainly drivetrain is a critical part of that. It is a logical extension of your ex- isting relationship with your fl eet customers. As distributors continue to fi ght the OE channel — which is viewed as a complete supplier of drivetrain compo- nents — it is imperative that distributors match that perception. Th ey can't be viewed as the guy I buy my brakes from. Th ey need to be viewed as my component sourcing preference. To do that, they need to have a broader range of products. Th ey already have invested in the relationship. Th ey can add benefi t to that relationship by having a broader portfolio of products. Drivetrain in general represents about 25 percent of the total parts aſt ermarket, so you have to ask yourself if you really want to walk past that opportunity or do you want to invest in it. TPS: What are the bigger picture implications of remanufacturing? Olsen: Remanufacturing is becom- ing a signifi cant buzzword across all industries, whether it is ink jet cartridges or offi ce furniture or anything else. But if you look back, the one market that it has been a mainstay in for decades has been automotive and heavy truck components. TRUCK PARTS & SERVICE | March 2012 It is interesting for us in the industry to watch how popular remanufacturing has become. One of the reasons it is becoming popular is because of the environmental aspect of it, which has been ignored for many years. Th e economic benefi ts have been pretty well understood in the automotive world, but now the environmental impacts are becoming more and more prevalent. Th ere have been studies done by Rochester Institute of Technology that suggests that a remanufactured diff erential consumes 85 percent less energy than a newly produced unit. Th at is similar for transmissions, rotating electrical, etc. It is logical. Th ere is a lot of cast iron; a diff erential weighs 350 lbs. Transportation costs and everything else associated with that get tremendously reduced when you remanufacture. And while the economic benefi ts still are there, you really have three segments. First you have the economic benefi t. A well remanufactured product might be two-thirds the cost of a new one. Today you have the increasing