production management
The UK ‘grey’ market for bearings - estimated as accounting for 12-15%
of total UK bearing sales - could be putting end users and distributors at
risk in terms of breakdowns, litigation and void warranties.
Is it the real thing?
HOW do purchasers of bearings
actually know that the products they
are buying are genuine and will
perform as well as they say on the
datasheet? Most don’t have to worry
because they purchase these products
either direct from the bearings
manufacturer or through an
authorised distributor. This method
guarantees that the manufacturer
meets any product warranties associated
with the bearing and that any technical
problems with the product are resolved
quickly and efficiently.
However, a growing ‘grey’ market (ie
any purchase of a bearing that is not
direct from the manufacturer or via an
authorised distributor) opens up routes
for more counterfeit products to enter
the market, and also puts end users and
distributors at greater risk. In the UK,
15% of all bearings are currently
purchased via the grey market. The
internet has opened up more
opportunities for purchasers to buy
bearings manufactured in India, the Far
East and Africa, but sold through
unauthorised traders across the world,
including a growing number of
European outlets. Cross-border trading is
commonplace and manufacturers often
sell off their surplus obsolete and out-ofdate
bearings to unauthorised traders.
Although buying on the grey market
doesn’t necessarily mean that the product
is not genuine, it increases the risk of
customers ending up with counterfeit
products. As to why companies purchase
through the grey market, cost is the
overriding factor. However, as Des
Pattinson, National Sales Manager at
precision bearings manufacturer
Schaeffler UK, points out: ‘Although the
offer price for the bearings may initially
look attractive, buyers on the grey
market have to ask themselves what are
the potential hidden costs in terms of
product liability and credibility with
their customers if the product turns out
to be counterfeit and things inevitably
start to go wrong. These could, for
example, be critical bearings on high
value machinery in a manufacturing
plant. The buyer therefore needs to take
into account the cost of any production
downtime if the bearing fails early.’
Purchasers also run the risk of not
knowing how the bearings have been
stored, in what conditions and for how
long. So, even if the bearing is a
genuine product, the manufacturer of
the bearing may not support product
liability and the warranty becomes
void. Pattinson offers an example: ‘A
distributor bought some bearings from
the grey market and asked us to analyse
the products. Schaeffler discovered
that the bearings were indeed genuine
product but were more than six years
old. This meant that the customer of
these bearings would most likely have
experienced lubrication problems that
in turn could have caused costly
machine breakdowns. There could also
be other performance-related
problems due to incorrect storage and
handling of the bearings during that
six-year period. Under these risky
circumstances, the distributor or end
user of the bearing would be left
totally isolated with no support from
the manufacturer of the bearing.’
Buying from the grey market
increases the likelihood of receiving
counterfeit bearings, whether
deliberately or accidentally. Earlier this
year, Schaeffler destroyed more than 40
tonnes of counterfeit rolling bearings
with a nominal value of around ¤8
million at its FAG site in Schweinfurt,
Germany. The bearings, which were
INA, FAG and SKF-branded products,
were seized at a Franconian rolling
bearing dealer. ‘The financial damage
resulting from such counterfeits is
difficult to quantify, even for our
companies alone,’ comments Ingrid
Bichelmeir-Böhm, lawyer and antipiracy
coordinator for Schaeffler Group.
In addition to lost sales and
significant loss of image through
inferior-quality goods that may affect
future business, there have been
enormous costs arising from the
investigation, seizure and professional
disposal of the bearings. The disposal
18 MWP january 2008
Buyers can
protect
themselves and
their customers
from fake bearings
only by purchasing
from a 100%
reliable source - by
sourcing direct
from the
manufacturer or
via an authorised
distributor.
requires tight security, for only the full
destruction of the counterfeits will
eliminate the danger for the consumer.
But the damage affects not only those
companies that produce brand-name
goods and invest heavily in research,
development and quality assurance. It
also affects the companies that install
these components. Rolling bearings are
used in virtually every piece of rotating
plant and safety-critical machinery and
vehicles, from machine tools, wind
turbines and X-ray apparatus, through to
automotive, aircraft and rail vehicles.
The Association of the German Tool
Manufacturing Industry estimates that
an annual 3,500 industrial accidents in
Germany alone are due to counterfeit
products. According to the German
Engineering Federation (VDMA), the
economic damage to the capital goods
industry amounts to some ¤4.5 billion
per year. ‘If it weren’t for brand and
product piracy, there would be about
70,000 more jobs in Germany,’ says
Doris Moller, Acting Board Member of
the German Business Action Group
against Product and Trademark
Counterfeiting. In conclusion, buyers
can protect themselves and their
customers from fake bearings only by
purchasing from a 100% reliable source
- by sourcing direct from the
manufacturer or via an authorised
distributor.
With a total of 68,000 employees at
over 180 locations around the globe and
group sales of ¤8.3 billion euros (fiscal
year 2006), the Schaeffler Group is one
of the world’s leading rolling bearing
manufacturers and automotive
component suppliers. The corporate
group includes the INA Group with
headquarters in Herzogenaurach, the
FAG Group based in Schweinfurt as well
as the LuK Group, with headquarters in
Bühl. FAG Industrial Services (FIS) is a
member of the FAG Group and supports
the Schaeffler Group in the UK and
worldwide with industrial services
including effective maintenance
management and condition monitoring.
www.schaeffler.co.uk
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