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Ford, Industry Get Serious About Stopping Fake Parts
The dangers of counterfeit auto parts are myriad.
There are serious passenger safety problems when a realistic-looking package contains brake pads made out of sawdust or compressed grass. Or a fake windshield that breaks easily.
Then there's the estimated $12 billion worth of business and jobs lost annually by automakers and suppliers.
Ford Motor Company and other automakers are working diligently to protect brand trademarks and other intellectual property.
"Manufacturers like Nike, Oakley and Coach, selling everything from tennis shoes to handbags and sunglasses have been very in tune to counterfeiting," said Joe Wiegand, manager, Global Brand Protection, Ford Motor Company. "The automotive industry is now starting to recognize the scope of the problem and is addressing it."
Counterfeiting is essentially stealing an automaker's trademarks, such as the Blue Oval and other brand images, or pirating design and utility patents. Counterfeiters usually target frequently purchased replacement parts, such as oil filters, belts, hoses, brake pads and sparkplugs. Ford loses an estimated $1 billion a year in displaced auto parts sales.
"Counterfeiting in the auto industry has been growing since mid-2003 when a lot of the complaints started coming in," said Neal Zipser, vice president of communications & marketing at the Motor & Equipment Manufacturers Association (MEMA). "We've seen a lot of counterfeiting issues coming from China, Eastern Europe and the Middle East. Generally, whenever economies have begun to emerge or grow that's where counterfeiting has taken place."
China seems to be a particular hotspot for counterfeiting. General Motors, Volkswagen, and other automakers have accused Chinese automakers of outright copying vehicles. In fact, the United States is considering lodging a formal complaint with the World Trade Organization over rampant Chinese counterfeiting of copyrighted American products. However, the Chinese government is taking steps and in July agreed to set up a bilateral intellectual property (IP) rights enforcement group, according to reports.
"Honda, GM and Mercedes have been burned by companies that copy their entire car, or an entire rear or front end," said Mark Sparschu, chief trademark counsel, Ford Global Technologies, LLC. "Ford has not yet been a victim (of such whole-car copying), and we are doing our best to prevent it."
The typical scenario is this: a counterfeiter copies an auto part and puts it into a package with the real automaker's or supplier's trademark logos on it, such as Motorola. The counterfeit part is then sold to consumers through illegitimate distribution networks.
Wiegand and the Global Brand Protection team work all over the world to stop counterfeiters -- going to trade shows, searching Web sites, and working with customs and other government agencies. Counterfeiters are sometimes easy to spot, as they often botch the trademark logo. For example, "Motorcraft" being spelled "Matorcraft," or parts misspelled such as "tierad" instead of tierod.
When Wiegand and his team find a counterfeiter, they work with local authorities to raid the manufacturing plant or distributor and confiscate the fake products. Millions of dollars worth of counterfeit Ford car parts were recently seized in Saudi Arabia.
After busting a counterfeiter, attorneys at Ford Global Technologies take over to pursue legal remedies -- a daunting task for automakers, as laws in other countries are not always as strong as in the U.S.
"There are very limited legal remedies that can be pursued," said Wiegand. "If we are successful, we get the product destroyed, and the counterfeiter pays a fine and is put on notice not to do it again." Often, the distributor simply sets up shop somewhere else. The key is tracking down the source of the product -- the counterfeit manufacturer.
As a financial issue, customs and other agencies like the FBI were reluctant to pursue counterfeiting aggressively. However, because of the safety issues involved with faulty car parts, government agencies are starting to take notice, said officials.
"We've seen counterfeiting in Rolex watches and Louis Vuitton handbags, and in the past it's been considered a victimless crime," said Zipser. "But now what we are seeing are a lot more counterfeiting in products posing consumer safety risks, including automotive, pharmaceutical and electrical products. The government has opened its eyes to it a little bit more and manufacturers are addressing it publicly, which they haven't done in the past."
Wiegand said, "When you start talking about parts that break, or brake pads that are made out of sawdust or compressed grass and you start talking about life-threatening types of issues, like windshields that rocks will go through, then they start to pay a little more attention to things."
"It's also American jobs at stake," said Sparschu. "A vast majority of the parts in our cars are made right here in the U.S., and they are being substituted by counterfeits that are by and large not being made here."
In the end, it's about protecting the Blue Oval's good reputation.
"At the end of the day, what do you have other than your brand," said Wiegand. "The Ford oval is one of the most recognized trademarks in the world; you can't allow it to be degraded."
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In between my next Mustang...
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