For some people, Auutomotive Aftermarket Industry Week in Las Vegas is a trade show devoted to chrome wheels, supercharges and fuzzy dice hanging from the rear-view mirrors. But a visitor to the Sands Convention Center - the convention site for the Motor and Equipment Manufacturers Association - will encounter supplers of brakes, airbags, seats and other original-equipment parts.
MEMA is trying to sort out a complex mix of issues that affect its members - verhicle recycling, federal emissions standards, merger mania, conflicting international safety standards - you name it.
Industry Editor David Sedgwick last week interviewed MEMA President Robert Miller. Edited excerpts:
How has the consolidation among original equipment suppliers affected aftermarket suppliers?
Many original-equipment suppliers also are aftermarket suppliers. So what we see in one market, we see in the other. Consolidation is on everybody's mind.
Nissan recently announced it will drop nearly half of its suppliers, and seek major price cuts from the survivors. What does this mean for your members?
As I understand it, they were talking about cuts of 20 percent. Those king of savings don't exist. Very few suppliers can do that and stay in business.
You have launched the Original Equipment Suppliers Association, and offshoot organization based in Detroit. Why?
It was a direct response to our own feelings that it was such a big market. We had to give the original equipment suppliers a home of their own. MEMA members make parts. OESA's members include raw-material suppliers, tool-and-die guys and engineering companies. We also have a lot of specialty equipment designers.
How fast is it growing?
We have 175 members already. And it is still growing. The first hundred members also are members of MEMA. But there are a lot of others, like Valeo, who didn't see the value of an association that was perceived to be an aftermarket group.
Conventional wisdom says aftermarket suppliers enjoy higher profit margis than OE suppliers. Is this true?
Aftermarket profit margins have been very tight for th past five or six years. Are the profit margins better? Yes. But aftermarket suppliers can't make bulk shipments of parts. They have to ship parts in packages.
They have to provide catalogs, and a field sales force. They've got a lot of things going on that original-equipment suppliers don't deal with. And they've got to carry a much larger inventory of finished goods. When you get down to the final analysis, the issue is the inventory. It can make or break you.
Your organizationhas tried to open up the market in Japan to your members. Have you had any success?
I think we've had a level of success. Are we at the point where we want it? No.
How concerned are your members about the automakers' reluctance to share OBD II emissions control coding with aftermarket suppliers?
It's a potential barn-burner for everybody. As these emissions systems become more sophisticated, you are going to have five or six electronic systems in a car talking to one another. Is that data stream going to be available to an independent repair shop so he can make a good repair?
(Without aftermarket success to OBD II coding), the repair might be perfect, but you can turn off that red malfunction indicator light on the dashboard. The aftermarket manufacturer needs to know if he is making the component that conforms to the system.
According to the Clean Air Act, this information has to be made available either free or at a reasonable price. We've gone around and around on this issue for several years now. It's not over.
This is not just a U.S. problem. The European market faces a similar situation, too.