Globalization is not an economic option or a temporary market dynamic. It is the force driving all business today and it has changed everything. The ramifications are still in their infancy.
In the general consumer realm, the global economy has long been in play, bringing us the big-box retail discounters that influence many of our purchasing choices.
Globalization is not so new in the heavy-duty truck parts market either. Anyone who feels it has crept up unexpectedly either has not been paying attention or has underestimated its full impact.
This was plain during the 2008 Mid-America Trucking Show in Louisville, Ky., last month. Tucked back in the West Wing of the Kentucky Fair & Exposition Center were dozens of China-based manufacturers displaying wares that ran the gamut of components and commodities. They chose North America’s largest trucking trade show where they would find visibility among more than 75,000 attendees. These companies are seeking to make an impact here, whether looking for partners to distribute their products, drive end user pull through or explore joint venture opportunities.
Globalization was also a main topic for many of the manufacturers during their press conferences and state-of-the-market updates.
There are many factors driving globalization, not the least of which is the low cost of manufacturing goods in China, India, Brazil, Vietnam or one of the other emerging foreign markets. For instance, in China, it’s about eight cents on the dollar to get products built, according to attorney Anthony Lupo, with Arent Fox in Washington D.C., a law firm that works with the Heavy Duty Manufacturers Association. Regardless of how it’s measured – dollars, euros, yuans or rupees – profit always will rule.
The good news is that some of those profits are there for distributors, whether from better margins and added value through traditional suppliers, or new sourcing options or fresh sales opportunities through export.
There are risks, as well, and this applies through every link in the supply chain. Manufacturers risk having their intellectual property stolen or their products shipped out the backdoor during a “nightshift.” Distributors may be opening themselves up to liability issues. As Lupo points out, “Distributors don’t always realize that if something goes wrong with that product – let’s say it isn’t tested to industry standards – the distributor is going to be pulled in possibly to recall and take responsibility for the product, because the U.S. is not going to go after this Chinese company that has no assets in the U.S.”
Your choices are greater than ever, as are the risks and rewards. It comes down to an aftermarket fundamental – buy from who you trust. You abide by it, your customers abide by it. Trust keeps your doors open, and your customers’ trucks running. Choices necessitate due diligence. Do your homework, rely only on suppliers that do theirs, and help each and every customer with this same assignment.
That will help keep the aftermarket – local, regional, domestic or worldwide – responsible, resourceful and profitable.
