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AASA Vision: Christian Brothers CEO Shares 6 Keys To Success
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By Counterman
Kurk Wilks, president and CEO of MANN+HUMMEL, has been elected vice chairman of the Motor & Equipment Manufacturers Association (MEMA) board of directors.
Wilks joined the MEMA board in 2021.
“Having Kurk as a vice chairman of the MEMA board is aligned with our mission to advance the business interests of the vehicle supplier community,” said Marc Blackman, president and COO, Gold Eagle, and chairman of the MEMA board. “I look forward to working with Kurk in his new role and during this transformational time in our industry.”
“I’m excited to work with Kurk Wilks as vice chairman of the MEMA Board,” MEMA President and CEO Bill Long said. “His industry expertise and experience in the global supply chain –original equipment and aftermarket in both the heavy-duty and light vehicle sectors – make him an ideal choice for this role.
During its most recent meeting in April, the MEMA board welcomed three new directors: Jon Husby, president and CEO, SEG Automotive; Mat Joy, president and CEO, Hendrickson; and Chris Pruitt, executive vice president, sales, finance and administration, East Penn.
“With the addition of Jon, Mat and Chris, the voice of our industry is amplified,” added Long. “They will be instrumental in guiding the future direction of the MEMA board and our great organization.”
Other executives serving on the MEMA board of directors are:
Chairman – Marc Blackman, president and COO, Gold Eagle Vice chairman – Mike Mansuetti, president, Robert Bosch LLC Treasurer – Tom Ward, senior vice president, and president, Repair Systems & Information Group, Snap-on Peter Butterfield, chairman and CEO, Omega Environmental Technologies Françoise Colpron, group president, Valeo North America Justin Greenberg, CEO, DieselCore Dominic Grote, president and CEO, Grote Industries Tim Musgrave, president and CEO, Pressure Systems International David Overbeeke, chairman, Maval Industries Eric Steinbecher, president, Automotive Aftermarket Americas, Schaeffler Group USA Bill Long, president and CEO, MEMA
Since 1904,
link hidden, please login to view has been the voice of the automotive and commercial-vehicle supplier industry, the largest manufacturing sector in the United States. MEMA is the parent organization of four affiliate associations: the Automotive Aftermarket Suppliers Association (AASA); Heavy Duty Manufacturers Association (HDMA); MERA – The Association for Sustainable Manufacturing; and Original Equipment Suppliers Association (OESA). The post
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By Counterman
Photo caption: From left, Northwood University Board of Trustees Vice Chair Steve Madincea; President Kent MacDonald; 2022 Outstanding Business Leader Bill Long; and Elisse Richardson, a Northwood student who introduced Long.
Bill Long, CEO of the Motor & Equipment Manufacturers Association (MEMA), has received the 2022 Outstanding Business Leaders Award.
Northwood University celebrated this year’s class of
link hidden, please login to view and the Richard DeVos Young Entrepreneur Award winner during a weekend that included a gala at the Henry Ford Museum in Dearborn, Michigan. “The Henry Ford Museum of American Innovation is a perfect venue to celebrate these industry leaders, as this historical museum celebrates American ingenuity, resourcefulness and innovation,” Northwood President Kent MacDonald said. “Like those innovative business leaders who have come before us, we honored this weekend contemporary business leaders who have also contributed to the free-enterprise system Northwood University holds so dear.”
The 2022 class of honorees includes:
• Bill Long, president and CEO, MEMA
• Jim Fitterling, chairman and CEO, Dow
• Michael LaFontaine Sr., president, LaFontaine Automotive Group
• Ben Manthei, founder and board member, Redi-Rock International
• Lisa McClain, U.S. Congresswoman representing Michigan’s 10th District
• Andra Rush, CEO, Dakkota Systems
• Angela Steele, Publicis Groupe
In addition, Manik Thapar, owner of Eco Wise Waste Management in Uttar Pradesh, India, was honored with the Richard M. DeVos Young Entrepreneur Award.
“What a great honor to be recognized by Northwood University with the Outstanding Business Leaders Award and be among such a distinguished class of honorees,” Long said. “It’s truly humbling share this recognition when considering the long list of distinguished honorees, many of whom I have known and admired throughout my career. And to the Northwood students, this is a time for new thinking, new ideas and new solutions to the issues of our day. We look to you to with hope and inspiration and to your leadership and what you will achieve.”
Northwood University annually recognizes a select group of business professionals for their achievements, support and exemplary leadership of the communities in which they live and work. These individuals serve as role models for Northwood University students as they share their experiences and obstacles they have encountered, in addition to how they overcame them while on the road to success.
In the four decades since the program began, more than 300 business leaders from more than 30 states and several countries, have been recognized. These honorees represent a vast, diverse, group of people from dozens of industries and fields of business expertise.
The Outstanding Business Leader Awards are presented by the Northwood University Board of Trustees. Each awardee is selected based on personal achievements which typify the unique philosophy of Northwood University. Criteria used in the selection of awardees include a contribution to the philosophy of private enterprise, support of the integration of business and the arts, contribution to education, economic innovation, creative marketing ideas, community involvement, religious leadership, philanthropic contributions, as well as business success. All honorees past and present serve as role models for Northwood University students.
Northwood University bestows the tremendous honor of the Outstanding Business Leader Award over a multi-day celebration ending with a formal gala event where the members receive an engraved crystal recognizing their honor. Proceeds from the event support the Outstanding Business Leaders Endowed Scholarship Fund at Northwood University. This year’s event raised $300,000.
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By Counterman
Electric vehicles. E-commerce. Vehicle complexity. Consolidation. Autonomous Driving. Connectivity. How will these and other trends affect the automotive aftermarket over the next decade, and more importantly, how should aftermarket suppliers respond?
A new study – “The U.S. Automotive Aftermarket in 2035” – attempts to answer these questions, with aftermarket suppliers “facing more inflection points than we ever have before,” in the words of Automotive Aftermarket Suppliers Association (AASA) President and CEO Paul McCarthy.
“And the reality is we can’t handle them all,” McCarthy said at the 2022 AASA Vision Conference in Dearborn, Michigan. “So we need to understand which ones are really going to disrupt us and which ones may matter less. Because if there’s one thing we know, the aftermarket in 2035 is not going to look like the aftermarket today.”
Conducted by the management consulting firm
link hidden, please login to view, the study looks at the current and future states of the automotive aftermarket. One of the most alarming conclusions from the study is that aftermarket suppliers aren’t ready to deal with nine high-impact trends: BEV (battery-electric-vehicle) penetration; e-commerce and o2o (online-to-offline); consolidation; labor shortages; supply chain disruption; data access; autonomous driving; supply chain footprint; and sustainability. Barry Neal, senior partner at Roland Berger, and Neury Freitas, principal at Roland Berger, presented an overview of the study findings at the AASA Vision Conference. Here are some of the highlights.
Battery Electric Vehicles
How much and how soon will BEVs affect the independent aftermarket? That all depends on which part of the market you serve.
By 2035, the study projects that only 2% of 12-year-old vehicles and older will be electric, while 11% of 8- to 11-year-old vehicles will be electric. However, the impact of BEVs will be more pronounced in newer vehicles, with 32% of 0- to 3-year-old vehicles expected to be electric.
“The more you are dependent on the OES or OEM channel, the more or sooner EVs will actually impact your business,” Freitas explained.
At 100,000 miles, BEVs require 50% fewer service visits than internal-combustion vehicles, based on OEM service recommendations. By 200,000 miles, that gaps shrinks slightly to 47%.
“There clearly are services that will disappear in an EV,” Freitas said. “Anything that’s related to the engine, anything that’s related to combustion will go away.”
BEVs will need battery coolant, but due to regenerative braking, brake systems typically last longer on electric vehicles.
“The tire players are really happy,” Freitas added. “They are waiting for EVs, because either you have a heavier vehicle that needs a stronger structure of the tire, therefore they’re more expensive, or if you use a normal tire, that’s going to wear faster. So, that’s a positive.”
Online-to-Offline Business Model
The pandemic has accelerated the growth of o2o in the automotive aftermarket, as more consumers embraced buying parts and booking appointments via their mobile devices. The linkage between the offline and online worlds “brings a lot of benefits and a lot of convenience for consumers,” Freitas asserted.
The increased convenience for consumers, and the cost savings along the value chain, will continue to drive the growth of o2o in two phases: parts efficiency, as proactive diagnostics and digital parts/service selection and scheduling enable a lower cost structure; and labor efficiency, as advanced booking/scheduling and predictive maintenance improve labor utilization and throughput.
“If you get the higher convenience for consumers, together with the potential cost savings, at a first step, if you know which parts will be needed and where they’ll be needed before they are actually needed, you can cut a few steps [from] the value chain and in the supply chain, and you can actually save some real money, as you don’t need hot-shot [delivery], for example,” Freitas explained. “And then in a second step, once we get to a large enough critical mass, and the shops are able to schedule similar services back to back, we might get some efficiencies from the technicians as well.”
Consolidation
According to Roland Berger, the United States is leading the way in terms of consolidation, with the top 10 distributors in the U.S. independent automotive aftermarket (IAM) commanding 75% to 80% of the total market share. Europe is a distant second, at 30% to 35%, while China is at 5% to 10%.
Roland Berger sees more consolidation ahead for parts suppliers and service providers (mechanical and collision). Going forward, there won’t be as many opportunities for large retailers to acquire distributors, Freitas asserted.
“Therefore, if one of those big companies has a hiccup over the next 12, 13 years, we see as a chance of two of those top four or five players actually merging and becoming an even larger player,” Freitas added.
Labor Availability
Looking at the big picture, U.S. unemployment rates were at historic lows in the years leading up to the COVID-19 pandemic. When the pandemic escalated in early 2020, it skyrocketed. Since then, the unemployment rate has been declining steadily. According to the U.S. Bureau of Labor Statistics, the unemployment rate in March dropped to 3.6%.
Neal and Freitas showed two charts that don’t bode well for the future of the IAM. One chart showed a steady decline in the number of students completing postsecondary degrees for automotive repair since 2010. The other chart showed the imbalance between the supply and demand of technicians since 2010. While the technician shortage is nothing new, the gap between supply and demand is projected to widen in 2025 and beyond.
Freitas concluded: “If the industry does not really get organized, we don’t think this problem is going to get solved anytime soon.”
Supply Chain
The headline here is that China appears to be losing its cost advantage – even without tariffs.
For the past decade or so, if you wanted to manufacture products on the cheap, China was the obvious destination. However, when you factor in the rising costs of outbound freight, raw materials, manual labor and other variables, China will lose its cost advantage to Mexico as soon as this year. By 2035, due to the projected increase in China’s labor costs, it will be significantly cheaper to manufacture goods in Mexico compared to China, according to Roland Berger.
Not surprisingly, Roland Berger projects that the percentage of U.S. auto parts manufactured in Mexico will grow from 24% in 2020 to 31% in 2035.
Data Access
By 2035, nearly 100% of new vehicles sold in the United States will be connected, meaning they’ll have the capability to receive and transmit information. Extrapolated to the total U.S. vehicle parc, 66% of vehicles will be connected.
How we get to that point – and how it will affect the IAM – is less certain. Currently, the automakers control most of the data generated by vehicles, which is bad for consumers, bad for IAM suppliers and good for the OEMs. In the medium term, Roland Berger anticipates a shift to open APIs (application programming interfaces) and “mixed control” of vehicle data.
In the long term, a move toward open APIs and open data would be best for IAM suppliers. However, where we land will likely be determined by federal lawmakers and the OEMs.
Action Steps
In light of the study’s findings, Neal and Freitas outlined a number of potential steps that IAM suppliers could take.
“In terms of individual responsibilities, there’s the importance of reviewing the portfolio and product strategy,” Neal said. “As you look at the influx of new technologies, both in terms of electronics, battery-electric vehicles, ADAS and autonomous, how are you adjusting your portfolio to adapt to those and what is the strategy you have, whether that be a last-man-standing strategy or looking for a third leg in terms of other opportunities, or the development of an EV strategy to attack some of the new opportunities that are coming out?”
Regarding the technician shortage, Neal also emphasized the importance of supporting trade schools “as well as supporting of advocacy at the high school and the middle school level for robotics programs and mechanical programs to ensure the interest of that technician force of the future, as well as an industry-level support for new entrants and opportunities, supporting aspects such as augmented reality and remote support for technicians in the field to allow some of those newer solutions to support a broader labor force in the future in terms of the capability set in technology.”
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By Counterman
A recent collaboration between NGK and AutoZone was awarded the 2022 Automotive Aftermarket Suppliers Association (AASA) Channel Excellence Award presented by Epicor.
The teams shared market research and applied point-of-sale (POS) data and other information to develop an oxygen-sensor program that grows market share, reduces inventory requirements and lays the foundation for future shifts in market demand.
Brian Norko, SVP, commercial business operations, NGK and Rob Bell, director, merchandising & customer satisfaction, AutoZone, accepted the award on behalf of their respective companies at the 2022 AASA Vision Conference in Dearborn, Michigan.
The annual AASA Channel Excellence Award presented by Epicor recognizes innovation and collaboration between suppliers and channel partners that drive aftermarket growth.
“This award is particularly special to NGK as it reflects our core business philosophy of creating mutual success,” Norko said. “Our company was founded on this principle and working together with our customers, delivering quality products and growing our businesses together – this continues to drive us. We are very proud to have been part of growing AutoZone’s O2-sensor business.”
Bell added: “We are extremely excited to achieve this Channel Excellence Award with NGK and sincerely thank AASA and Epicor for this tremendous honor. This great recognition would not have been possible without the collective effort of NGK and our amazing AutoZoners across the entire organization. Our phenomenal results show the power of data and the importance of customer feedback when leveraged in a collaborative environment.”
NGK and AutoZone identified a sustained increase in demand DIFM customers for OE oxygen-sensor technologies. The companies then utilized POS and other data to build OEM-based O2-sensor families by vehicle application to address this trend. The new approach resulted in a 100% sales increase of NGK’s NTK-brand 02 sensors through AutoZone while eliminating more than 290,000 stocking placements across the AutoZone network. In addition, AutoZone achieved a more than 700-bps shift in DIFM market share in the wideband O2-sensor category.
The winning project is featured in a
link hidden, please login to view on the AASA website. The NGK/AutoZone project was one of three joint initiatives by automotive aftermarket companies selected as award finalists. The other finalists were Bosch/NAPA and Dorman with multiple channel partners. Short videos submitted by each of the AASA Channel Excellence award finalist teams were played at the 2022 AASA Vision Conference and are also posted on the
link hidden, please login to view. “This award recognizes the achievements in collaboration and innovation between suppliers and their channel partners to drive growth together,” said Paul McCarthy, AASA president and CEO. “We give this award to encourage an openness to the behaviors we all know we need to see – innovation and collaboration across the value chain. We congratulate NGK and AutoZone for embodying these behaviors and finding a way, together, to greater success in a challenging climate.”
“These projects demonstrate the value of collaboration in solving the challenges of a highly complex value chain,” said Tim Hardin, senior vice president and general manager, Automotive, Epicor. “Ultimately, each success builds toward a future where data-driven collaboration isn’t just project based, but a daily part of doing business and optimizing our industry’s contributions to the global economy.”
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By Counterman
The Charles Dickens classic “A Tale of Two Cities” produced one of the most famous opening lines in all of literature: “It was the best of times, it was the worst of times … ”
More than 150 years after “A Tale of Two Cities” was published, the phrase is an apt description of what life has been like for aftermarket suppliers, distributors and retailers during the COVID-19 pandemic.
As Paul McCarthy, president and CEO of the Automotive Aftermarket Suppliers Association (AASA), kicked off the 2022 AASA Vision Conference in Dearborn, Michigan, he observed that the line “rings true in this age of uncertainty.”
“It has been some of the hardest times to simply do our jobs – to just get our products to the customer – yet it has also been some of the greatest prosperity that the aftermarket has ever experienced,” McCarthy said.
Stimulus-driven DIY sales have led to the best of times for the aftermarket’s publicly traded parts retailers, and they reported record growth in 2020 and 2021. At the same time, supply chain disruptions have made it challenging for some suppliers and distributors to get their hands on parts and raw materials.
“Typically, part of our industry’s appeal is our slow, steady, reliable growth – our consistent cash-flow generation,” McCarthy said. “During the pandemic, we seem to have found another level of demand for our products. And we’ve also been in a battle for availability. The reality over the last two years is that if you could get the part to the customer, they would likely buy it.”
While the past two years have been prosperous for many aftermarket participants, it’s also been the worst of times in the sense that the economy has been hit with “a flock of black swans.” Even before this once-in-a-century pandemic hit, the aftermarket was grappling with tariffs on imported Chinese goods as well as the biggest changes to U.S. trade policies in decades.
“We haven’t had a supply chain disruption of this magnitude for 75 years,” McCarthy said. “It’s been over 40 years since we’ve seen inflation like this. It’s been decades since we’ve seen a job market this tight. If that wasn’t enough, members tell us that we’ve experienced some of the highest levels of government intervention in the aftermarket, maybe in our history.”
On top of that, there’s a land war in Europe, and U.S.-Sino relations are as tense as they’ve been in decades. Potential curveballs on the horizon include more interest-rate hikes, gas-price increases and the specter of Russian cyberattacks.
Still, although it’s “an environment where it may not be easy for us,” it’s one “where we can do very well.”
“Our ability – despite all these obstacles – to fill orders, to keep our businesses running, to sustain our teams, to work together up and down the value chain, it’s frankly amazing how well the aftermarket has performed,” McCarthy added. “It proves our resilience and our endurance. So don’t expect things to get any easier, but the aftermarket and aftermarket suppliers, we’ve shown that we matter.”
A New Golden Age?
Despite all the “bumps in the road,” McCarthy posed this question to AASA Vision attendees: “Is there a chance that these strong sales that we’ve seen are not a blip, that instead they are the start of a new golden age?”
“The transformative cultural shifts that we’re seeing as a result of the pandemic, we think they bode well for the future of the aftermarket – that we are leaving the pandemic with a more auto-centric lifestyle than when we went into it,” McCarthy asserted.
To buttress his point, he noted that used-car prices are higher than they’ve been since World War II; there are more than 280 million vehicles in operation in the United States; and the miles-driven recovery “has exceeded all forecasts.”
With commuters and travelers still fearful of mass transportation, “Americans are moving toward more car-centric locales and lifestyles,” he added.
“We see it in consumers’ desire for more space. We see it in the house prices, in people moving to the West, to the South, to smaller cities, to exurbs. Coming out of COVID, where most Americans now seem to want to live, they need a car or a third or a fourth car. They need us, the aftermarket.”
While technology might be a source of angst for some, “this unstoppable march of increasing vehicle content has been incredibly powerful for the aftermarket ticket,” McCarthy declared. “And we think that will continue.”
And the increasing in-vehicle connectivity “is making our time in the car more entertaining, more productive, more appealing.”
“We would argue that this is a global opportunity that the pandemic underscored to consumers around the world: the safety, the appeal of individual transport and the freedom that it brings. So we think we could look back in 2040, 2050, and say that this was the start of a new golden age of transportation. And we could say that we grabbed this opportunity and we created new ways forward.”
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