Reverse engineers produce replicated parts that hurt both the OEM and the end user.
As long as there has been rotating equipment, there have been pump pirates. Significant growth of pump parts pirating, however, started in the 1960s. Pump owners went to these pirates, or reverse engineers, due to the premium pricing and slow delivery times on pump spares offered by many original equipment manufacturers. Today, decades later, manufacturers are providing quicker delivery at a far lower price. Today, pump customers can receive OEM parts immediately, instead of waiting weeks. Despite OEM improvements, one thing has not changed. Parts pirates are still bombarding South African industry with their cloned parts, which have now adopted the disarming term `generic parts' to describe their offerings.
Cheap copies
Parts pirates need the mechanical part from the original manufacturer in order to reverse engineer it. The part or parts are analysed to reveal design and function, and drawings are made. Then, the replicator makes the parts and puts them into the pump. Typically, the replicator does not offer a total complement of parts - only those in high demand, and normally, these parts are produced in short runs. The final, reproduced replacement part will take the place of worn, broken, or obsolete pump components.
Complications involved with pirate parts
If you have purchased pirate parts in the past you are no doubt already aware of the dangers associated with replicated parts. If not, reading on may save you a lot of time, money, and frustration. The vane pump has been a target for pirates for many years due to its design, which incorporates a replaceable cartridge kit, which can be replaced if the pump fails, and serves as an insightful case study into the realm of reverse engineering.
"Replicated parts have problems, such as inferior materials of construction, quality of manufacture, and dimensional fit," says Dave Leach, managing director of Goldquest Hydraulics, the exclusive sub-Saharan distributor of Vickers Hydraulics - a leader in vane pump technology.
"The use of inferior materials is one of the most prevalent shortcomings that we encounter in pirate cartridge kits that we extract from pumps brought to us by frustrated pump users for repair in our repairs department. Sure, the pirate cartridge may work for a while if it is run at a low pressure, but it is once the unit is put under the stresses and strains of the working environment that these flaws quickly become obvious.
Really, it is no wonder that this is the case when you look at two simple principles. Firstly, the experience curve; OEMs have the benefit of years of experience and established research and development facilities that allow them to produce the product in the first place, and have established the production methods that allow them to reproduce product that is of a consistently high quality. Pirates have very little or no experience with the product in question, and very little to offer in terms of research and development, if anything at all. Secondly, OEMs enjoy the benefit of the economic principle known as economies of scale. As a rule, in economic terms, the marginal cost of producing each additional product decreases as volume increases. Therefore by producing very large quantities of product, OEMs are able to reduce the unit cost of production to a point where an absolute cost advantage is obtained over other manufacturers.
"Pump pirates are by no means producing the volumes of vane pump cartridges that Vickers do, so how then can they manage to produce pirate kits of the same quality, and at a competitive price, given that the cost of raw materials and skilled labour is determined by the market? The answer is simple: reduce costs by compromising quality. This means cheaper materials, cheaper manufacturing processes, cheaper labour and relaxed quality control. I can tell you that 100% of all cartridge kits produced by Vickers are thoroughly tested and QC passed, and we are aware that competitors such as Rexroth's manufacturing and quality assurance regimes are equally as fastidious," says Leach.
In addition to the shortcomings in performance and reliability, pump users are also left without access to warranties on repaired products once the pirate part is installed. OEMs will not hesitate to deny warranty claims once pirate parts are discovered in faulty pumps. In many of these instances these individuals have become loyal OEM customers once they have realised the implications of their decision to use pirate parts. Not only has the pump failed and production been interrupted, but the resultant slug of contamination that is released into the system wreaks havoc with other system components. OEMs cannot afford to dismiss valid warranty claims on faulty products as this could irreparably damage their reputation in the marketplace; the pirate on the other hand has no established reputation to damage and simply moves on to the next 'victim'. Trying to recover damages from the pirate will inevitably prove to be a fruitless exercise.
"A test certificate is issued, and comprehensive warranty instated on all repairs carried out by our repairs department," says Leach. "Our customers leave our premises with real peace of mind knowing that their repair is backed by a world renowned brand and that they have recourse should they experience any problems with their repaired pump."
With this kind of track record, why then do end-users turn to the pirates?
Traditionally there are four basic reasons. Number one, availability ... If an end-user needs a part and the distributor does not have it in stock, maybe the pirate will. Two, the pirate is knowledgeable and a good sales person and has gained the trust of the end-user. Thirdly, ignorance, the end-user does not know the difference between the original and pirate components. And lastly, and perhaps the most driving reason, price. Customers simply do not want to pay the OEM's going rate and are prepared to take the risk for a small price saving. This, however, is only an initial saving. Nevertheless, savings are savings for companies spending thousands of rands in pump business annually, or experiencing tough economic times.
The value of the OEM
An increasingly important goal for OEMs these days is to educate customers on the value of the OEM. These manufacturers and their appointed distributors provide customer service, as well as:
* Control procedures.
* Hydraulic testing.
* Knowledgeable sales staff and technical support.
* Materials of consistent quality.
* Original specifications and tolerances.
* Research and development.
* Warranties.
This educational effort coupled with the competitive spares pricing strategies adopted by companies like Goldquest in South Africa has seen the pirates marginalised to some extent. "We have done our homework and we know what the pirates are asking for their products. In most cases the pricing of a genuine Vickers part is only marginally more expensive than the pirates. The rapid strengthening of the rand in recent times allowed a small umbrella for some pirates to import cheap replicates due to the weakened dollar, but since then our stock, which was brought in when the dollar was at its strongest, has been depleted and subsequent stock shipment was brought in under the more favourable exchange rate and we have adjusted our selling price accordingly.
"But pricing is only one issue, our real concern is whether customers are being provided with the right product and what control is being exercised over the repair process," says Leach. "Repairing a pump is not just a matter of chucking in a new cartridge and tightening up the bolts."
However, the pirates remain persistent and some less scrupulous individuals remain within the industry who are not above passing off their reverse engineered parts as the genuine article. Luckily, the OEMs have spotted this tactic and have instituted measures that aid the customer in fighting fraud. Distinctive trademarks, part numbers and markings are now placed on parts that are frequently targeted by pirates, and the pirates know that any attempt to replicate these trademarks will result in legal action against them. Recognising and checking for these trademarks on spares is a good way to avoid deception. If you still have your doubts, you can always contact the OEM's customer service centres where advice is readily available.
Unfortunately, the OEMs will never be able to completely stop pump part piracy from taking place - it is a free market, and as the years pass, there are sure to be more and more parts pirates in the industry. Today the worldwide pump market is worth billion of dollars, whether that revenue goes to the OEMs, or the pirates, is for the end-user to decide.
For more information contact Goldquest International Hydraulics, +27 (0) 11 614 2004, [email protected]
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