Growing Grey Market
April 25, 2007
Between 12 and 15% of bearing sales in the United Kingdom are made on the ‘grey market’ and puts end users and distributors at greater risk of costly breakdowns.
According to Schaeffler (UK), current estimates indicate that the UK’s ‘grey market’ for bearings accounts for between 12 and 15% of total UK bearing sales Not only does a growing grey market open up routes for more counterfeit products to enter the market, It also puts end users and distributors at greater risk of costly breakdowns, litigation and void warranties
This article was originally published on Manufacturingtalk on 2 Sep 2003 at 8.00am (UK)
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Improved track rollers offer better performance Yoke type and stud type track rollers contain needle rollers or cylindrical roller bearings with a profiled outer ring and can support high radial forces and axial guide forces. Low temperature bearings increase spindle speeds ‘Low temperature’ machine tool spindle bearings operate at significantly reduced temperatures - approximately 10 degrees lower than the average - resulting in speed increases of up to 10%. 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 data sheet? 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. So it’s worrying that in the UK, around 15% of all bearings are currently purchased via the ‘grey’ market, which refers to any purchase of a bearing that is not direct from the manufacturer or via an authorised distributor.
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New service advises on bearing maintenance To help its customers make maintenance programmes more effective bearing manufacturer INA FAG is offering a service giving independent diagnostic, monitoring and maintenance advice on bearings. X-life - a bearing quality double act from INA FAG Branded X-life, this new premium quality standard represents improvements in product design, product performance and service life that far exceed current standard values and expectations. Laser thermometer checks bearings Laser thermometer measures temperature of hard to reach or moving machinery components and will help machine operators act proactively against possible problems. The Internet, for example, has opened up more opportunities (and dangers!) for purchasers to buy bearings manufactured in the Far East and Africa but sold through unauthorised traders based in Europe, the Far East and Africa - indeed all across the world. Cross-border trading is commonplace and companies often sell off their surplus bearings to unauthorised traders. Although buying on the grey market doesn’t necessarily mean that the product is not genuine, it certainly increases the risk of customers ending up with counterfeit products. The grey market becomes an easier route for traders to supply counterfeit bearings into the UK. So why do companies purchase through the grey market? Cost is obviously the overriding factor here. * beware of low prices - as Des Pattinson, National Sales manager at precision bearings manufacturer Schaeffler UK, pointed 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”. He said: “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 were 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 offered a recent 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 have been 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 could 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 EUR 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,” commented Ingrid Bichelmeir-Bohm, lawyer and anti-piracy 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 requires tight security, for only the full destruction of the counterfeits will eliminate the danger for the consumer. But the damage affects not only the companies producing brand-name goods and investing heavily in research, development and quality assurance. It also affects those 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 EUR 4.5 billion per year. “If it weren’t for brand and product piracy, there would be about 70,000 more jobs in Germany,” said Doris Moller, Acting Board Member of the German Business Action Group against Product and Trademark Counterfeiting. In conclusion, buyers can only protect themselves and their customers from fake bearings by purchasing from a 100% reliable source - by sourcing direct from the manufacturer or via an authorised distributor.
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