Transcript Slide 1

Brake Manufacturers Council
General Meeting
Las Vegas, NV
October 31, 2011
Agenda
• Welcome and Introductions – Bob Wilkes
• Review of Anti-trust Guidelines – Sarah Bruno
• Industry Analysis – Paul McCarthy
• MEMA Government Affairs Update – Ann Wilson
• SAE Task Force Update – Greg Vyletel
• Wrap-up and Adjourn – Bob Wilkes
Antitrust Guidelines
It is the unqualified policy of the Motor & Equipment Manufacturers
Association to conduct its operations in strict compliance with the antitrust
laws of the United States.
MEMA's antitrust policy prohibits any discussions which constitute or imply
an agreement or understanding concerning: 1) prices, discounts, or terms
or conditions of sale; 2) profits or profit margins or cost data; 3) market
shares, sales territories or markets; 4) allocation of customers or
territories; 5) selection, rejection or termination of customers or suppliers;
6) restricting the territory or markets in which a company may resell
products; 7) restricting the customers to whom a company may sell; or 8)
any matter which is inconsistent with the proposition that each
manufacturer, wholesaler and distributor must exercise its independent
business judgement in pricing its services or products, dealing with its
customers and suppliers and choosing markets in which it will compete.
Aftermarket Point-of-View
11/2011
Paul McCarthy
Vice President, Industry Analysis
Automotive Aftermarket Suppliers Association
This presentation is the property of the Automotive Aftermarket Suppliers Association (AASA) and subject to the protection of copyright, trademark and other intellectual
property laws. No portion of this presentation may be reproduced or distributed (including by email) without the prior written consent of AASA.
Agenda
1. Recent Publications
2. Aftermarket Outlook:
A. Why to be Concerned
B. Why to be Positive
3. Pulse: Supplier KPI Benchmarks
4. Upcoming Study: Longer Terms & Factoring
Status Report, World Motor Vehicle
Market Report, Replacement Rates
Market size
Product durability
Parts demand trends
Unperformed maintenance
Aftermarket size and growth
Size and growth of key subsectors
Vehicle population and usage
Outlet channel market share
DIY market share trends
World vehicle census by country
Global production and assembly
World trade in motor vehicles
World motor vehicle markets
On your memory cards and available for download on AASA website
AASA Barometer:
Very positive response to recent changes
Barometer Changes
• Insight, not data
• “So what” and trends clear
• More timely: use in quarterly
management / investor reports
• Participation at all-time high
• Participants received a lot of
this presentation’s content a
month ago!
If you’re one of the few that doesn’t participate, START!
AASA Pulse: Supplier KPI Benchmarks
Big Changes This Year
• New multiple choice format took
average completion time down to 6
minutes
• Completely new report focused on
the “so what” for your business
Next Year
• Survey out in April
• So can better use in business
planning
• PLEASE PARTICIPATE – you’re
missing out if you don’t
• Very favorable AASA Board
feedback
• You’ll see select results in this deck
Jeff Brekke (Gates): “I’m blown away by this report. This really is
great business information you can’t get anywhere else.”
Special Reports & Timely Analysis
Follow-up to Aftermarket 2020:
Leveling the Playing Field
If you missed it, other recent
AASA Industry Analysis:
New fuel economy
regulations: Why they
may be good for the
aftermarket
High Gas Prices:
Is It Different This
Time?
A copy should be on the
table in front of each of you
Timely Barometer
feedback on the
issues facing your
business
•Recession expectations
•What recession would means for
aftermarket
•Impact of raw material prices
•Impact of higher fuel prices
•Japan disaster impact
Agenda
1. Recent Publications
2. Aftermarket Outlook:
A. Why to be Concerned
B. Why to be Positive
3. Pulse: Supplier KPI Benchmarks
4. Upcoming Study: Longer Terms & Factoring
Is the sky falling?
•
There has been a lot of talk about
recession risk, economic
stagnation, and slowing growth
•
What does this mean for the
aftermarket?
•
Should we be concerned or
positive about the outlook?
Agenda
1. Recent Publications
2. Aftermarket Outlook:
A. Why to be Concerned
B. Why to be Positive
3. Pulse: Supplier KPI Benchmarks
4. Upcoming Study: Longer Terms & Factoring
General economic trend is worrisome
NAM Economic Conference
• 35-40% chance of recession
• Very vulnerable economy
• Two risks could easily tip us into
recession:
1. European meltdown causes a
banking crisis
2. Ill-timed fiscal tightening (either
tax increase or big near-term
government cuts)
Consumer Confidence at recession levels
Best case: Slow-growth “new normal”
Aftermarket suppliers are predicting a
recession
Do you believe the US economy has or will
soon enter a recession?
60%
40%
59%
41%
20%
0%
Yes
-20%
No
AASA members’ outlook continued to worsen
Sentiment in the aftermarket in the range seen during last recession
50
40
30
20
10
0
-10
-20
-30
-40
-50
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
Supplier Sentiment Index
Persistently high gasoline prices remain
a drag on performance
$3.42/gal 10/24/11
Weekly U.S. Regular All Formulations Retail Gasoline Prices (Dollars per Gallon)
Source: Energy Information Administration
Miles driven is stagnating after 3
decades of steady growth
Annual Vehicle Miles Driven (Billion Miles)
3,200
3,000
2,800
2,600
2,400
2,200
2,000
1,800
Source: US DOT
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1,600
It’s harder for consumers to afford to
maintain and repair vehicles
Number of US Americans who:
Can’t pay for a $2,000 repair
%
~25%
Can afford a $2,000 repair from savings
38%
Can afford a $1,000 repair from savings
46%
Neglected car repairs & maintenance in
the last 12 months due to economy
~25%
Holding on to older vehicle because they don’t
want the financial burden of a new one
>50%
Sources: AAA
Rate of aftermarket supplier sales growth
has declined for four consecutive quarters
6%
55%
-22%
2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Small Declines
Large Declines
Modest Growth
Substantial Growth
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Decline
120%
100%
80%
60%
40%
20%
0%
-20%
-40%
-60%
-80%
Growth
How strong are your company sales?
Agenda
1. Recent Publications
2. Aftermarket Outlook:
A. Why to be Concerned
B. Why to be Positive
3. Pulse: Supplier KPI Benchmarks
4. Upcoming Study: Longer Terms & Factoring
Addressable market – US parc – is
enormous and stable
Light Vehicles in Use
250
240
Millions
230
220
210
200
190
180
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Polk
Gas prices alleviating; a price spike is
unlikely given slow global growth
Every $0.01 decrease
moves $1 Billion into
vehicle owners’ pockets
(annualized)
Weekly U.S. Regular All Formulations Retail Gasoline Prices (Dollars per Gallon)
Source: Energy Information Administration
Aftermarket is growing robustly
compared to other sectors
There is no perfect measure, but all indicators are up
Source
Growth Rate
Retail sales - Auto parts, accessories
& tire store (US Census)
+5.4% (Jan-Aug.)
Same-store sales, retailers &
distributors (BB&T)
+3.2% in Q2
Manufacturer sales (AASA Supplier
Barometer)
+6.1% in Q3
Sources: US Census Department, BB&T, AASA Barometer
Vehicle age – the primary aftermarket
driver – continues to increase
Average Age of Light Vehicles in Use (Years)
11.0
10.5
10.0
9.5
Next year, we will
have the highest
number of vehicles
out of warranty ever
9.0
8.5
8.0
2002
Source: Polk, Ward’s
2003
2004
2005
2006
2007
2008
2009
2010
The aftermarket sweet spot is shifting
and broadening
“Age of vehicles that
come into our shops
used to be 6-10 years …
but has widened to 4-12
years”
– Rob Gross, Chairman, Monro
• Vehicles >10 years old
make up 46.6% of the
aftermarket and will
exceed 50% by 2013
• Weak economy and
increasing vehicle
durability changing
the “repair or replace”
equation
Source: AASA Status Report, IMR, DesRosiers, Experian
The trend is shifting back to DIFM after
a DIY spike in the downturn
Source: IMR Inc., AASA Status Report
There is still pent-up demand for vehicle
repair
• 2010 tied with the
second-highest level
ever, reached
during the recovery
from the last
economic downturn
• Unemployment and
tight household
budgets caused
many to put off
maintenance and
repairs unless they
were unavoidable
Source: AASA Status Report, IMR, Experian
Which means our market could and
should be much larger
Source: AASA Status Report, IMR, Experian
Even if a recession comes, 79% of suppliers
think the aftermarket will outperform the
general economy
Do you think the aftermarket will outperform the general
economy as it did during the last recession?
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
79%
21%
Yes
No
The automotive aftermarket is much
less cyclical than the OE market
Note:
gray bars =
recessions
Sources: AASA Status Reports (2003, 2010), Census Bureau, Ward’s, NBER, AASA analysis
This counter-cyclical behavior helps the
attractiveness of the aftermarket to investors
Strong Operating Results Translates to Stock Outperformance
150%
120%
90%
60%
30%
0%
-30%
-60%
S&P 500
AAM Index
Suppliers
Professional Repair
Retailers & Distributors
Collision
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
-90%
Automotive Aftermarket Suppliers: CTB, DORM, FDML, GT, MPAA, SPM, SNA; Professional Repair: MDS,
MNRO, PBY; Retailers & Distributors: AAP, AZO, GPC, KAR, ORLY, PBY, PRTS, UNS; Collision: BYD.UN, CPRT,
KAR, LKQX, SLH
Source: BB&T
Longer term, new U.S. fuel economy
regulations are good for the aftermarket
New fuel economy standards will reduce the cost per mile driven, incentivizing
miles driven and the aftermarket
Sources: AASA Status Reports (2003, 2010), Census Bureau, Ward’s, NBER, AASA analysis
Global vehicle population growth
provides increasing opportunities
We’ve passed a
billion vehicles
globally
CAGR
2005-2010
5.7%
Source: Polk, Ward’s
Outlook is positive: 89% of aftermarket suppliers
are predicting growth for their company in 2012
What level of revenue growth are you planning for
in your preliminary 2012 budget?
80%
70%
60%
50%
40%
30%
20%
10%
0%
76%
13%
Substantial
growth
7%
Moderate
growth
No change
4%
Moderate
decline
Conclusion
•
The sky is not falling in the aftermarket
•
Aftermarket offers products and services
that remain remarkably resilient even in
difficult economic times
•
Though we see shifts in:
• Demand drivers
• Winners and losers
Agenda
1. Recent Publications
2. Aftermarket Outlook:
A. Why to be Concerned
B. Why to be Positive
3. Pulse: Supplier KPI Benchmarks
4. Upcoming Study: Longer Terms & Factoring
AASA Pulse Excerpts:
Supplier KPI Benchmarks
Returns
2011 AASA Pulse: Supplier KPI Benchmarks
38
Total returns generally declined year-over-year
2011 AASA Pulse: Supplier KPI Benchmarks
39
Share of Total Returns by Category
Warranty and Stock/Obsolescence returns make up 87% of total returns
2011 AASA Pulse: Supplier KPI Benchmarks
40
Warranty Returns
Warranty returns decreased significantly year-over-year
2011 AASA Pulse: Supplier KPI Benchmarks
41
Stock and Obsolescence Returns
However, median stock adjustments increased significantly; customers
appear to be watching inventory carefully given the uncertain demand
2011 AASA Pulse: Supplier KPI Benchmarks
42
Fill Rates & Operations
2011 AASA Pulse: Supplier KPI Benchmarks
43
Fill Rate – by Unit Volume
Performance decreased year-over-year, especially for low performers; this is
perhaps due to the challenges of meeting increased demand
However, competitive differentiation is small for most suppliers: median is
close to top quartile, and at the industry target of 95%
2011 AASA Pulse: Supplier KPI Benchmarks
44
Order Turnaround
Order fill rate improved dramatically year-over-year, especially for the
highest performers, as less than 24 hour turnaround become more common
2011 AASA Pulse: Supplier KPI Benchmarks
45
Order Turnaround
In 2010, two models appear to predominate: either order turnaround in less
than 24 hours (26% of respondents) or 2-3 days (54%)
2011 AASA Pulse: Supplier KPI Benchmarks
46
Financial Metrics
2011 AASA Pulse: Supplier KPI Benchmarks
47
Published Prices
Results indicate a significant year-over-year decline in supplier pricing power
Decline is shocking considering increases in input prices and demand
Note: Responses do not represent actual price changes; just changes in listed prices on published jobber price sheets
2011 AASA Pulse: Supplier KPI Benchmarks
48
Gross Margin
GM performance varies widely in the industry: 34% are above 35% GM, while
32% are at worrisome levels of 19% or below
2011 AASA Pulse: Supplier KPI Benchmarks
49
Aftermarket R&D
Aftermarket R&D intensity is generally very low, but there are exceptions to
this rule
38% spend <1% of sales on
R&D, while 7% are at 5%
or higher spending
2011 AASA Pulse: Supplier KPI Benchmarks
50
Sales Force
2011 AASA Pulse: Supplier KPI Benchmarks
51
Sales Commissions
1-3% is the most common range of sales commissions for manufacturer reps,
but some give much higher commissions (average is 3.3%)
2011 AASA Pulse: Supplier KPI Benchmarks
52
Results Segmented by
Company Size
2011 AASA Pulse: Supplier KPI Benchmarks
53
Returns
Smaller suppliers appear to keep their return rates lower; this may be a
function of the product segments they compete in
Metric
Total returns
Upper Quartile
Median
Lower Quartile
Mean (Avg.)
Respondent Revenue Size
<=$150M $151-500M
>$500M
6.2%
2.9%
1.1%
3.8%
2011 AASA Pulse: Supplier KPI Benchmarks
54
9.6%
4.7%
3.6%
8.1%
5.5%
5.2%
3.8%
4.5%
Fill Rates
Larger enterprises appear to have an advantage in terms of fill rate
Respondent Revenue Size
Metric
<=$150M $151-500M
>$500M
Fill rate as a % of unit volume
Upper Quartile
97.0%
97.0%
97.0%
Median
93.0%
95.0%
97.0%
Lower Quartile
85.0%
92.0%
93.0%
Mean (Avg.)
90.7%
92.5%
95.2%
2011 AASA Pulse: Supplier KPI Benchmarks
55
Operational & Shipping Metrics
There are much higher rates of vendor direct and drop shipments for larger
companies; in future, those business models may migrate to smaller players
Respondent Revenue Size
Metric
<=$150M $151-500M
>$500M
Vendor direct (% of business)
Upper Quartile
1.5%
4.0%
15.5%
Median
1.5%
3.0%
6.5%
Lower Quartile
0.0%
1.0%
3.5%
Mean (Avg.)
1.9%
2.8%
11.9%
Drop shipments/cross docking (% of business)
Upper Quartile
5.5%
10.0%
15.0%
Median
0.8%
3.5%
12.5%
Lower Quartile
0.0%
3.5%
3.1%
Mean (Avg.)
3.0%
6.0%
11.6%
2011 AASA Pulse: Supplier KPI Benchmarks
56
Financial Metrics
Pricing power appears to be stronger at the extremes - larger companies and
smaller niche players
Respondent Revenue Size
Metric
<=$150M $151-500M
>$500M
Jobber price sheet (weighted % change)
Upper Quartile
4.5%
2.0%
3.5%
Median
2.5%
1.5%
3.5%
Lower Quartile
1.5%
0.0%
2.8%
Mean (Avg.)
2.8%
1.1%
3.9%
2011 AASA Pulse: Supplier KPI Benchmarks
57
Financial Metrics
Aftermarket supplier SG&A costs tend to increase as the company size
increases
Respondent Revenue Size
Metric
<=$150M $151-500M
>$500M
SG&A (% of aftermarket sales)
Upper Quartile
15.0%
15.0%
15.0%
Median
8.0%
10.0%
12.0%
Lower Quartile
5.0%
5.0%
10.0%
Mean (Avg.)
9.8%
10.9%
11.3%
2011 AASA Pulse: Supplier KPI Benchmarks
58
Financial Metrics
Larger companies appear to have significantly lower GM than their smaller
competitors
Respondent Revenue Size
Metric
<=$150M $151-500M
>$500M
Gross margin (weight average, aftermarket)
Upper Quartile
37.5%
40.0%
27.5%
Median
37.5%
37.5%
23.5%
Lower Quartile
20.5%
19.0%
18.3%
Mean (Avg.)
29.8%
29.9%
22.5%
2011 AASA Pulse: Supplier KPI Benchmarks
59
Agenda
1. Recent Publications
2. Aftermarket Outlook:
A. Why to be Concerned
B. Why to be Positive
3. Pulse: Supplier KPI Benchmarks
4. Upcoming Study: Longer Terms & Factoring
AASA Pulse:
Terms & Conditions
2011 AASA Pulse: Supplier KPI Benchmarks
61
Longest Terms with a Major Customer
Terms are being extended due to factoring and high customer bargaining
power: avg. longest terms are 165 days and the lower quartile is at 270 days
2011 AASA Pulse: Supplier KPI Benchmarks
62
Days Sales Outstanding
DSO went down year-over-year, likely due to increasing use of factoring
High DSO at a small
set of outliers
increased the 2010
mean over 2009
2011 AASA Pulse: Supplier KPI Benchmarks
63
Terms of doing business are unusual in our
industry
General Retailers
Note: Quarter ending 7/31/2011
Sources: AASA MFSG from public filings
Aftermarket-only
Retailers
64
The example of one AASA member shows the
potential exposure of reverse factoring
Metric
Impact
Days Sales Outstanding (DSO)
36
DSO without reverse factoring
275
Sensitivity to a 1% increase in interest 10.5% reduction in
expense
net income
Source: 10Ks, Public filings, market assumptions, analysis. Findings are directionally correct only
65
This is symptomatic of the general lack of
manufacturer leverage with customers noted in
Aftermarket 2020
Booz Aftermarket 2020 Study: Average Gross Margin
47%
48%
47%
49%
48%
Top 3
Retailers
(+ ~2% points)
21%
21%
19%
17%
19%
Select
Manufacturers
(– ~2% points)
2005
2006
2007
2008
2009
1)
Average of gross margins weighted by company sales; includes global aftermarket segment of Federal Mogul, Standard Motor Products, Tenneco, and
Dorman.
2) Includes AutoZone, Advance Auto Parts, and O’Reilly. Average of gross margins weighted by company sales.
Source: Company financials; Analyst reports; Booz & Company analysis
66
There are reasons suppliers are doing this
• Reverse factoring is seen as a financially attractive
way to retain or grow sales
– Interest expense is modest at the current time
– A low cost of financing versus other facilities
• Incentives/threats from customers to accept longer
terms/reverse factoring
• Expedites cash flow into business
Source: 10Ks, Public filings, market assumptions, analysis. Findings are directionally correct only
67
Risks are low as long as money is essentially
free …
• … the Fed rate can
reasonably be
expected to rise by
500 to 600 basis
points when
inflation or
economic growth
returns; similar
impact on LIBOR
• Mode (most common
value) for Fed funds
rate is 5.5% (1990present)
• Early in the Reagan
administration, the
Fed Funds rate
exceeded 19%
Source: US Federal Reserve; Fed Fund effective rate,
monthly data 1990 to 8/2011
68
… But are rising interest rates the Achilles heel
for aftermarket suppliers – in the same way an
economic downturn was for US automakers?
Detroit 3 Automakers
Aftermarket Manufacturers
Scenario planning matrix, 2006
Scenario planning matrix, 2012
• Economic cycle
• Fuel price spike
• Interest rate
increase?
High
likelihood,
High impact
High
likelihood,
High impact
Impact
Likelihood
Likelihood
Impact
Result: they weren’t
prepared for inevitable
risk and went bankrupt
Result: ???
Are we prepared for a similar high
likelihood/high impact risk?
69
What will study cover?
P0tential next steps
Value
1) Determine the real costs and risks to the
industry
• Now
• In a rising interest rate environment
•
2) Investigate alternatives to factoring
• Other ways to address working capital and
credit insurance needs
•
Help broaden supply base
alternatives
3) Suggestions welcome
•
Needs to be member-driven
•
Open dialogue with
customers
As per past successful study
on pay-on-scan
Please contact if you are interested in serving on Advisory
Committee
70
Thank you!
Paul T. McCarthy
Vice President
Industry Analysis, Planning & Member Services
AASA | Automotive Aftermarket Suppliers Association
10 Laboratory Drive | Research Triangle Park | NC | 27709
Office: 919.406.8812 | Mobile: 248.914.2567
www.aftermarketsuppliers.org
Brake Break
Be back at 3:30
Legislative Update
Ann Wilson
Senior VP Government Affairs
Motor & Equipment Manufacturers
Association
Brake Manufacturers Council
•
•
•
•
•
Washington
Signed into law March 19, 2010
2014 – no more than trace amounts of asbestos,
cadmium, chromium, lead, & mercury
January 1, 2013 – industry to provide baseline
data on regulated substances
2015 – risk assessment begins
2021 – 5% copper content for brake friction
materials
Brake Manufacturers Council
Washington
• On-ramp important
• Inventory run-off essential
• Tough Issues
– OES exemption broader than inventory run-off
– Encouraged other states!
Brake Manufacturers Council
•
•
•
•
California
Signed into law September 28, 2010
2014 – no more than trace amounts of asbestos,
cadmium, chromium, lead, & mercury
2021 – 5% copper content of brake friction
materials
2025 – 0.5% copper content of brake friction
materials
Brake Manufacturers Council
California
•
•
•
•
No fee
No specific Green Chemistry
But no on-ramp
Extensions process outlined for 2025
Washington Better Brakes
• Stakeholders meet via conf call bi-weekly
– Includes Reps from Industry (MEMA/BMC, SAE, AAIA), Wash DEC and Calif
DTSC, Environmental NGOs, Retailers
• Issues discussed so far:
–
–
–
–
–
Self-certification
Edge code marking
Package Labeling/Certification Mark
Exemptions/Exclusions
SAE Test Methodology Task Force
• Timeline Targets
–
–
–
–
–
Oct. 28 -1st Draft Rule
Jan/Feb - Public Workshop
May 23 – Formal Rule
June/July - Mandatory Public Hearings
Oct. 17 – Final Rule
State of California
• DTSC has not yet started their rulemaking process
– Partly due to change in Governorship and delays in getting state agency appointments for key
CalEPA and DTSC posts
– DTSC will continue to work and coordinate with WA DEC.
– DTSC will issue guidance. Guidance centers on analytical procedures, certification, and
edge codes. Areas of concern exist.
• MEMA/BMC have been looking at the state’s screening process and
expects to prepare recommendations
Self-Certification & Federal Law
• U.S. Code definition: “manufacturer” means a person—
– (A) manufacturing or assembling motor vehicles or motor vehicle equipment;
or
– (B) importing motor vehicles or motor vehicle equipment for resale.
• National Traffic and Motor Vehicle Safety Act
– It is the responsibility of a manufacturer of vehicles and/or items of motor
vehicle equipment to self-certify that each motor vehicle and/or equipment
item is in full compliance with the minimum performance requirements of all
applicable Federal Motor Vehicle Safety Standards (FMVSSs)
• U.S. has a self-certification system; not type-approval system
81
How Self-Certification
Compliance Works
•
According to NHTSA Office of Vehicle Safety Compliance:
– The manufacturer must not only be concerned with the initial certification,
but should also monitor continued compliance of vehicles and/or items of
motor vehicle equipment throughout the production run. To accomplish this,
an effective quality control program must be established to periodically
inspect and test vehicles and/or items of motor vehicle equipment randomly
selected from the assembly line to ensure that the original performance is
carried through to all other units.
• When no FMVSS apply, it is reasonable to measure the product’s design
against existing, accepted product standards, such as a set of voluntary
industry standards.
– Self-certification could include conformity assessment from a 3rd party
certification body
– International Standards Organization (ISO) is just one example of a 3rd party
certification body
82
Self-Certification Program Goals
•
•
Develop an industry-wide, self-certification program that ensures friction material
suppliers (domestic and imported) manufacture, sell and distribute within NAFTA
only products which comply with applicable California and Washington
requirements (as amended).
Program will use accredited laboratories (ISO 17025 or NELAC certified) to ensure
compliance with applicable state regulations for copper and other constituents
contained in brake friction material products, based on:
– SAE testing protocol (currently in-process)
– Edge Code Markings
•
•
Program will use a third-party registrar to confirm regulatory compliance and
provide public access to list of certified companies and products.
Develop successful implementation and marketing of the Program to:
– OEM vehicle and truck manufacturers, aftermarket spare parts manufacturers
– Legislative, regulatory and environmental stakeholders
– Integral tool to achieve a NAFTA solution in the absence of federal legislation
83
Self-Certification:
Essential Program Elements
•
•
•
•
•
•
•
•
Industry accepted 3rd party registrar to certify program compliance.
Importer of Record or other suitable US based entity must obtain certification for
imported product.
Suitable product testing, edge code markings and product packaging labels utilized
to confirm and advertise product compliance with Program.
SAE approved testing protocol and accredited laboratories (ISO 17025 or NELAC
certified) required.
Initial certifications valid for 3 years – then may be renewed for subsequent 3 year
periods upon updated testing results.
Product and packaging labels shall be marked with required edge code markings
which include notation of regulatory compliance and product date code.
Product edge code and compliance confirmation will be available on Registrar’s
Internet site for stakeholders’ confirmation and review.
Consumer focused product marking (i.e. Low Copper Product, Complies with
California Copper Requirements, etc.) will be the decision of retail box designer.
84
Thank you!
Ann Wilson
[email protected]
(202) 312-9246
SAE Material Testing
Greg Vyletel
Sr. Global Technical Expert
Meritor
Wrap-up
• Next BMC Meeting
June 1, 2012
Longboat Key, FL
(The day before FMSI meeting June 2-3)
Save the Date!
Thank You!