Federal-Mogul takes aim at 'cheap' aftermarket parts from China
DETROIT -- Federal-Mogul Holdings Corp., saying its Champion spark plugs and other aftermarket parts are losing out to “cheap” products from China sold by big retail chains, is fighting back.
The diversified parts supplier said today its aftermarket division will be renamed Federal-Mogul Motorparts. A crew of newly hired technicians will visit stores and service shops to tout the benefits of Wagner brake products, ANCO wiper blades and other components.
“The aftermarket has seen an increase in poor quality, non-brand parts, especially in the last five years,” said Daniel Ninivaggi, CEO of the aftermarket division and co-CEO of the parent company. “We, the industry, haven’t done a good job telling the public about our parts, about the quality and safety differences.”
A new Federal-Mogul Motorparts logo and marketing campaigns for its brands -- which include Moog steering parts and Fel-Pro gaskets -- will be rolled out immediately, the company said.
The restructuring of the division will also include a new technical education program for customers. Federal-Mogul plans to hire 30 technicians from metro Detroit who will travel the United States to educate installers and sales outlets on the company’s products. The group will be hired and trained over the next three to six months.
“We used to train installers, but as the AutoZone’s and O’Reilly’s took over, they began to train them; when we lost that connection customers began converting to private-label, cheap products,” Ninivaggi said. “There’s no easy way for consumers to tell which parts are higher quality, so we’re going to engage the installers directly and communicate about our quality.”
A new commerce and instructional Web site for its products will be completed in the next 12 months, Ninivaggi said.
The move coincides with Federal-Mogul’s plan to open two 500,000-square-foot distribution centers in Southern California and New York, which was announced in an earnings call earlier this month.
Ninivaggi said the push will make a “meaningful” difference in the aftermarket division sales.
“We have lost sales, significant sales over the last five years, because of the migration from premium to cheap products,” he said. “Our goal is to regain those sales.”
The rebranding is one of many changes at the supplier in recent years.
For years, rumors circulated of activist investor Carl Icahn's desire to sell his majority stake in Federal-Mogul.
The board in 2012, under Icahn's push, split the company in two. It appeared a calculated move to sell at least one of the businesses in the private equity feeding frenzy of the post-recession.
Yet, the deals never transpired, and for now it appears Icahn is focusing energy, and capital, to growing its aftermarket business into an international juggernaut with a mainline to his oversight.
Ninivaggi became the third co-CEO in February in less than two years.
He replaced Kevin Freeland in the position; Freeland left the company for personal reasons, the company said in a statement. Freeland was hired in the role in May 2013.
Ninivaggi had served as president and CEO of New York-based Icahn Enterprises LP since 2010.
In April, Federal-Mogul Corp. became a subsidiary of the newly formed holding company after it completed a transaction to convert stocks. The company, and its Motorparts and original-equipment divisions, is now the operating unit of the holding company.
Federal-Mogul has long struggled with profitability. It reported net income of $93 million on revenue of $6.8 billion in 2013 -- its first profitable year since 2010.
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