Job2013jul01

Jobber News

HDDC’s 29th Business Conference A Smashing Success • AAEC Announces BEST Of The BEST Award Winner • Ontario Trucking Association Opposes Tax Hike to Fund Transit

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Serving the Automotive Aftermarket Since 1931

2013 Jobber of the Year

SOUTH SHORE

SUCCESS STORY

Groupe Maska, Saint-Hyacinthe, Que. Refrigerant Debate Still Heating Up Cat Performance Matters Filters: Brand Value Up, DIY Down

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Visit AutoServiceWorld.com.

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This Month

Contents

July 2013

Vol. 81,

16

No. 7

COVER

It’s one thing to build a successful business. It is quite another to keep it successful and growing as it is handed down from one generation to the next.

The Letendre family’s Group Maska Inc. operation, headquartered in the bustling small city of Saint-Hyacinthe on Montreal’s south shore, and now boasting six branches, is proving that it has what it takes to not only make the intergenerational transition, but to thrive on it.

There’s no magic to it: hard work and commitment to the customer have kept Groupe Maska growing and finding new opportunities for more than 60 years.

SOUTH SHORE

SUCCESS STORY GROUPE MASKA, JOBBER OF THE YEAR

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Over the Counter

Honeywell’s Low-Global-Warming Refrigerant Ruled Safe; Ontario Trucking Association Opposes Tax Hike to Fund Transit; HDDC’s 29th Business Conference A Smashing Success; Shad’s Raises $160K, Breaks $4 Million Mark; AAEC Announces 2102 BEST Of The BEST Award Winner; Slapshots For A Cause Raises $7,500 For Canadian Cancer Society; Schrader Launches EZ-Choice.com And TPMS Road Show.

Market Tracker:

How Close Are We To a Low-GWP Refrigerant?

The automotive air-conditioning industry seemed to be on a smooth, albeit more expensive, path to a new low global-warming-potential (GWP) refrigerant with the recent introduction of R-1234yf. However, last September Daimler announced new flammability tests, and made it clear that it wouldn’t use R-1234yf, putting itself in opposition to the worldwide coalition (of which it was a member) that had agreed on this chemical.

Money & Management:

Is This The Right Time To Sell Your Business?

With the economy languishing in Canada, many business owners are wondering if this is the year to consider selling their business. There are five specific reasons why it would make sense to sell sooner than later.

26 Market Feature: Filters Brand Value Up, DIY

Down Overall, increased consumer spending on routine maintenance products over the short to medium term is expected as people choose to keep their vehicles longer in the current economy.

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Knowledge Building: Catalytic Converters Clearing The Air Choosing a replacement catalytic converter is much like choosing which cup the street busker has the loonie hidden under. They may look alike, but not all catalytic converters perform alike.

33 Autoserviceworld.com Internet Directory 34 Comment YOU ARE NOT ALONE

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AND NEWSMATION INFOR

OVER THE COUNTER

JULY Delphi Announces New Ignition Coils Delphi has announced the launch of 12 new ignition coils covering more than 9.6 million Audi, Honda, Nissan, Jaguar, BMW, GM, Hyundai, Kia, Volvo, and Toyota applications from 1998 to 2012. Part numbers: GN10322, GN10323, GN10324, GN10325, GN10326, GN10327, GN10328, GN10329, GN10330, GN10331, GN10332 and GN10334.

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AutoServiceWorld.com Launches Facebook Page AutoServiceWorld.com, Canada’s longest-serving aftermarket online information source, has launched its Facebook page.

The page can be found at https://www.facebook. com/pages/AutoService Worldcom/ 244916465611841 In addition to carrying industry news, the social media platform will boost industry interaction with AutoServiceWorld.com and provide yet another way for the industry to connect.

Follow us on Twitter.

Get AutoServiceWorld.com News and more by following JobberNews on Twitter.

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SAE, Eleven Automakers Declare Honeywell Low-GWP Refrigerant Safe Honeywell has announced that SAE International, the world’s leading automotive engineering association, has concluded that Honeywell’s new low-global-warming-potential mobile air conditioning refrigerant, HFO-1234yf, is safe for use in automobiles after completing an expanded and extensive evaluation (see full report on page 10).

The SAE International Cooperative Research Project (CRP) also said that all 11 global automakers who participated in the project “have indicated agreement with these conclusions,” and called testing conducted by Daimler late last year that raised questions about the refrigerant’s flammability “unrealistic.”

“After extensive testing and analysis, the new CRP concluded that the refrigerant release testing completed by Daimler was unrealistic,” the SAE CRP said in its final summary.

“Their testing created extreme conditions that favoured ignition, while ignoring many mitigating factors that would be present in an actual real-world collision.”

“The conclusions from SAE’s latest expanded evaluation, combined with years of extensive testing in the U.S., Europe, and elsewhere, again leaves no doubt that HFO-1234yf is safe for automotive applications,” says Ken Gayer, vicepresident and general manager for Honeywell Fluorine Products. “The fact that all 11 global automakers participating in the project agreed with the SAE CRP’s conclusions is further proof that this product can be used safely.”

The latest CRP included European, North American, and Asian automakers, including Chrysler/Fiat, Ford, General Motors, Honda, Hyundai, Jaguar Land Rover, Mazda, PSA, Renault, and Toyota.

HFO-1234yf, a highly efficient, safe, and effective replacement for HFC-134a, is already in use by the auto industry. It is being adopted by automakers in part to meet the European Union’s Mobile Air Conditioning (MAC) Directive, which aims to reduce the greenhouse gas emissions of air-conditioning systems in passenger cars and light commercial vehicles.

The directive requires that refrigerants in all new-type vehicles sold in Europe after Jan. 1, 2013, have a global-warming potential (GWP) below 150 and that all cars sold after 2017 meet the lower GWP requirement.

HFO-1234yf has a GWP of 4 and reduces global warming impact by 99.7%, compared with HFC-134a. According to third-party data, HFO-1234yf’s adoption in cars today would have the greenhouse gas equivalent impact of removing more than four million cars from European roads.

HFO-1234yf was the subject of comprehensive testing conducted by an SAE CRP from 2007 to 2009. That CRP, which was sponsored by 15 global automakers, including all leading German automakers, major suppliers, and 18 international, independent research institutes, concluded that HFO-1234yf is safe for use in automobile applications.

Ontario Trucking Association Opposes Tax Hike to Fund Transit

trucks, etc.) which are exempt from the normal registration and licensing requirements and therefore are exempt from paying any vehicle registration fees, use tax-exempt diesel fuel, and are not subject to most other vehicle or safety compliance standards.

OTA estimates the revenue leakage to the province from this omission to be around $50 million per year.

The exemption appears to go back to an old law exempting road-building machines from provincial registration. “These vehicles are not asphalt spreaders, bulldozers, and the like, which are clearly road-building machines that operate exclusively in construction zones,” Bradley says. “These are trucks; they serve many commercial purposes and customers, they operate on provincial highways, and they impose wear and tear on the public infrastructure like any other motor vehicle. The only difference is they don’t pay anything,” he argues. “$50 million would buy a lot of infrastructure; we have a hard time accepting that some trucks should pay more while others pay nothing. From a tax point of view these non-contributing trucks enjoy the same tax status as bicycles.”

The Ontario Trucking Association (OTA) added its voice to widespread opposition to a Metrolinx proposal for a special five-cent a litre tax on fuel to help pay for the regional transportation agency’s long-term $20 billion transit plan for the Greater Toronto and Hamilton Area.

“The trucking industry believes in paying its fair share for the infrastructure it uses. However, Metrolinx is a transit plan; it does not address the equally compelling need to maintain and upgrade the region’s or the province’s network of roads, highways, and bridges,” says the OTA’s president and CEO, David Bradley.

Instead, OTA’s position is that tax revenues generated from commercial diesel fuel taxes and heavy truck registration fees should be allocated to a dedicated provincial trust fund specifically for roads, highways, and bridges.

In addition, truckers are already smarting from a 70% increase in commercial plate fees announced by the Ontario government last year. “No other sector has been subjected to such an increase in user fees,” Bradley claims.

Moreover, there are a huge number of heavy utility trucks (such as mobile cranes, vacuum trucks, concrete pumping trucks, water

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Mevotech Receives Polk Inventory Efficiency Award Mevotech was honoured with the Polk Inventory Efficiency Award at the Global Automotive Aftermarket Symposium (GAAS). A significant factor for Mevotech in improving efficiency has been its Excellence in Inventory Strategy (EXIST) program designed to address the issues of limited warehouse space and maintaining accurate inventory.

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OTA says a regional diesel fuel tax is potentially very problematic. The association believes it would impact the competitiveness of GTHA trucking companies, and could cause some to re-locate outside the boundaries of the region.

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Epicor Announces New Epicor Prism Features Epicor has announced the addition of nearly 20 new features to its Epicor Prism business management software for automotive aftermarket parts wholesalers. The newest release includes enhanced eCatalog functionality and full integration with the robust new cloud-based Epicor AConneX CL eCommerce solution.

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It exempts carriers from contributing towards the infrastructure costs who are based outside of the region (and from outside of the province) but who operate into, out of, and through the region every day.

Shad’s Raises $160K, Breaks $4 Million Mark

Shad’s R&R outdid itself this year, its 40th anniversary, with a strong annual contribution of $160,000, bringing the cumulative total to more than $4 million.

Started after a group of aftermarket professionals felt bad after skipping off to play golf one day, Shad’s R&R – the R&R stands for “remorse and regret” – has become one of the automotive aftermarket’s key fundraisers, and has been making contributions to aid research into muscular dystrophy since its inception.

“Without the continuing support of spirited folks like you, I could not be here,” said Christine Sherrand, CEO of Muscular Dystrophy Canada. “A cure has not been found, but people suffering from muscular dystrophy live fuller, more enjoyable lives,” she remarked, and thanked the assembled aftermarket professionals for their ongoing support.

Those in attendance also enjoyed a presentation by MD sufferer Christina Massad, a 25-year-old journalist and host of her own cable television show, Living DisAbled. She gave an emotional speech on the difficulty of being a teen with MD, dealing with many who doubted she even had a disability, as her mobility is still good by MD standards. After one particularly difficult confrontation while parking in a handicapped spot, “I realized it was time for me to educate myself and educate others. It was a very significant moment when I said I was not going to let MD control my life.”

Shad’s R&R board of directors thanked the nearly 300 attendees and golfers for their ongoing support.

Editor and Publisher Andrew Ross (416) 510-6763 E-Mail: aross@jobbernews.com Associate Editor Steve Pawlett (416) 510-6839 Contributing Editor Emeritus Bob Blans Contributing Editor Martha Uniacke Breen Contributing Writers Mark Borkowski, John G. Smith Nate Hendley, Peter Diekmeyer Sales Manager Jay Armstrong (416) 510-6745 Circulation Manager Selina Rahaman (416) 442-5600 ext 3528.

Customer Service Roshni Thava (416) 442-5600 ext 3555 Art Director Choo Hwee Kuan Production Manager Steven K Hofmann (416) 510-6757 Vice-President Alex Papanou President Bruce Creighton

Jobber News is published by BIG Magazines LP, a div. of Glacier BIG Holdings Company Ltd. a leading Canadian information company with interests in daily and community newspapers, and business-to-business information services. All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted in any form, either in part or full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior consent.

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JOBBER NEWS / JULY 2013

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HDDC’s 29th Business Conference A Smashing Success

Want More?

HDDC members raised $64,000 for the SickKids Foundation, almost double the amount raised at last year’s conference.

The Heavy Duty Distributor Council’s 29th Annual Business Conference at the Hilton Suites Toronto/Markham Conference Centre & Spa in Markham, Ontario, was highly anticipated by industry members from across the country as always, but this year’s Conference certainly surpassed everyone’s expectations with its immense success.

The Conference was kicked off on Saturday, June 1st, with a welcome reception that allowed the more than 200 attendees to catch up with old friends and to network. By Sunday morning, however, members got down to business at the Associates’ and Distributors’ Annual General Meetings (AGMs). Of particular significance, the Distributors voted to pass Phase 1 of HDDC’s new By-Laws by an overwhelming majority, such that the By-Laws are now in compliance with the Canada Not-For-Profit Corporations Act and will allow associate members to vote at future AGMs. The Distributors also voted Kevin Hopton, CBS Parts Ltd., and Gerard Zentner, Capital Gear Ltd., on to the HDDC Board of Directors to replace Liza Fontaine, Fort Garry Industries Ltd., and Bob Loye, Malmberg Truck Trailer Equipment Ltd., who have vacated their positions as WD directors.

On Monday June 3rd, more than 60 members golfed at St. Andrew’s Valley Golf Club in Aurora, Ontario, while another 30 members go-karted at Formula Kartways in Brampton, Ontario. Members then returned to Markham for a live charity auction and raised $64,000 for the SickKids Foundation, almost double the amount raised at last year’s conference. Following the auction, Kevin Broadwood, vicepresident of the HDDC Board of Directors and organizer of the charity auction, was awarded HDDC’s first Dedicated Service Award by president Ian Johnston to recognize his hard work and dedication.

“HDDC has supported the SickKids Foundation for many years now, and we’re so pleased that we will be able to hand them such a large cheque this year,” says HDDC president Ian Johnston. “Of course, we could not have done it without Kevin’s hard work, which is why it was such an honour to recognize him with HDDC’s first ever Dedicated Service Award.”

Schrader Launches EZ-Choice.com And TPMS Road Show

Schrader, a global manufacturer of sensing and valve solutions, has announced a new, multi-faceted campaign, “Make the EZ-Choice.” As part of its ongoing effort to drive awareness and best practices for tire pressure monitoring system (TPMS) technologies, Schrader’s “Make the EZ-Choice” campaign engages all aftermarket channels on topics such as TPMS strategy, advanced diagnostics, operational best practices, customer

Do you want more of the latest technology?

More products to sell? More support, training, and profit for your business?

More than just the world’s leading clutch company, Schaeffler is a leading partner of engine, chassis and drivetrain products to the automotive vehicle original-equipment and replacement parts markets in North America.

Let us show you how we can keep your business on the road.

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communications, keys to profitability, and navigation through the myriad of choices for replacement sensors and service packs. With this campaign, Schrader launches the company’s EZ-Choice.com website and a targeted road show tour delivering hands-on training for all aftermarket technicians and sales professionals in key markets throughout the U.S. and Canada.

“As with any aftermarket service, TPMS repair begins with an accurate diagnosis, so that the work can be done quickly and efficiently,” says Trevor Potter, vice-president of aftermarket sales at Schrader. “Simply put, you must have a TPMS diagnostic tool in order to accurately diagnose the problem up front, then inform your customer prior to conducting TPMS repairs.”

AAEC Announces BEST Of The BEST Award Winner for 2012

www.redi-sensor.com

Never any added sensor programming or cloning steps with REDI-Sensor™ TPMS! Delivering over 85% coverage with just 3 sensors.

• Ready out of the box!

• Pre-programmed and designed to follow OE vehicle relearn procedures • Works with all major TPMS scan tools • Now covers over 85% of all vehicles in North America • Reduces inventory and eliminates service delays • OE designed and validated For more information, e-mail: salessupport-us@vdo.com or call: 800-564-5066

See why VDO REDI-Sensor™ saves time and money.

Watch the video:

Bob Greenwood, president and CEO of Automotive Aftermarket E-Learning Centre, Ltd., has announced that Extra-Tech Automotive Ltd. of Calgary, Alberta, has won the prestigious BEST of the BEST Award for 2012. The AAEC head office is located in Abbotsford, B.C. and the AAEC development and web management team is located in Ottawa, Ontario.

The annual BEST of the BEST award is won by the shop that has improved its business the most in one year compared to its previous year among all The AAEC BEST of the BEST Award the AAEC BEST clients across Canada. There are 14 was presented to Gianni and Doris key business measurements that are analyzed equally Barbieri, the owners of Extra-Tech Automotive Ltd., and the entire Extra- among all AAEC BEST clients.

The Award was presented to Gianni and Doris Tech staff with a surprise visit by the AAEC executive team in May. Barbieri, the owners of Extra-Tech Automotive Ltd., and the entire Extra-Tech staff, with a surprise visit by the AAEC executive team in May. “We are extremely proud of this award. It has taken a lot of hard work and perseverance by the Extra-Tech team to get to this point and to continually see the bright future of this industry. We are looking forward to continuing with the AAEC team to help us reach our future goals,” said Gianni Barbieri.

“BEST” stands for Business Evaluation Support and Training. Information on this unique business concept can be viewed on the AAEC website at www.aaec.ca, by clicking on the blue tab at the top labelled “BEST Program.”

Slapshots For A Cause Raises $7,500 For Canadian Cancer Society

Canadian automotive aftermarket youngsters, as well as a growing number of industry veterans who mainly participate for the post-game festivities, got together recently at the Mississauga Iceland Arena for the 22nd Annual Slapshots For A Cause charity hockey tournament in support of the Canadian Cancer Society.

This year the group raised $7,500 for the CCS, through player registrations and sweater sponsorships. The “Koval Cup,” named in memory of long-time ice sponsor Lube Koval, was presented to the Red sweater team during The 22nd Annual Slapshots post game celebrations. Organizers sent special thanks to For A Cause raised $7500 for the Canadian Cancer Society. Janice Koval for continuing her family’s sponsorship of the ice rental.

APPOINTMENTS

Jim Tapp Retires from Goodson Tools & Supplies

VDO and REDI-Sensor – Trademarks of the Continental Corporation Like us at facebook.com/REDISensor

Goodson Tools & Supplies for Engine Builders has announced the retirement of former tech services manager, Jim Tapp.

Tapp, whose last day is June 28, 2013, has been with Goodson Tools & Supplies since April, 1992. According to David Monyhan, Goodson sales manager, “Jim has been at the heart of many of our new products over the years. He has experience in running his own shop and teaching at a tech school, which gave him a unique perspective on the shop supplies business. Jim will be missed and we wish him the absolute best.”

Tapp says that once he retires, he plans to get his home machine shop reorganized so he can work on small engines and “finally finish the 1937 Ford half-ton pickup I’ve been trying to get to for years.”

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MARKET TRACKER

Low-GWP Refrigerants:

How Close Are We?

By Steve Pawlett

I

s the perfect, low-GWP (globalwarming potential) refrigerant close at hand?

The automotive air-conditioning industry seemed to be on a smooth, albeit more expensive, path to a new low global-warming-potential refrigerant with the introduction of R-1234yf a few years ago. This was a single-compound chemical requiring a relatively low amount of system re-engineering, with the same pressure-temperature curve as R-134a. And it appeared to be the industry’s choice.

However, last September Daimler announced the results of its own flammability tests, and made it clear that it wouldn’t use R-1234yf, putting itself in opposition to the worldwide coalition (of which it was a member) that had agreed on this chemical.

Then, the new SAE International Cooperative Research Group (CRP1234-4) reviewed the Daimler data, and reported that it backed the original CRP that had approved R-1234yf. The German carmakers pulled out of the new CRP on the grounds their safety concerns were not adequately addressed. The coalition of 10 other manufacturers remains nominally intact in support of R-1234yf.

The MAC Refrigerant Blend Cooperative Research Program (MRB CRP) is administered by SAE and is comprised of the following companies: Behr, Bosch, Chrysler, Cinetic Filling, Denso, Doowan, General Motors Company, Halla Visteon Climate Control, Hyundai, Jaguar Land Rover, Mexichem, Nissan, PSA, Renault, SAIC Motors, Sanden, Schrader International, Texa and Volvo Cars.

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The only vehicles on sale in the U.S. with R-1234yf are the Cadillac XTS and Honda Fit electric vehicle (EV). A Cadillac ATS installation was changed to R-134a when a noise problem surfaced on the 2.0-L turbo, caused by compressor vibration resulting from the expansion valve setting selected for R-1234yf and proximity of the compressor mount to the front engine mount.

Nowadays, has the low-GWP refrigerant train – with R-1234yf in it – left the station?

Apparently there is enough belief it hasn’t, because, for one thing, it is expensive and for another, its efficiency is measurably lower than that of R-134a. And it’s still flammable, though only mildly so.

However, its GWP is just 4.0, vs.

1430 for R-134a.

The German Federal Motor Transport Authority, KBA, has stated it will perform specific safety tests for the controversial air conditioning refrigerant 1234yt this coming July. According to the report, there will be a two-stage test procedure in which the KBA first determines the point at which the air conditioning of the model is damaged and the second step will prepare a vehicle of the same type with these defects. These tests will form the benchmark for standards of different driving profiles measuring the fire probability. However, no agreement with the SAE and KBA has been reached on how the test should be performed.

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2000

1965

Valvoline launches MaxLife®, the first motor oil for high mileage engines

Valvoline introduces the first & best selling racing oil of all time

1866

Dr. John Ellis invents motor oil

1939

Valvoline develops X-18, a single grade oil which could be used in place of 18 different specified automotive lubricants

1996

Valvoline launches DuraBlend™, the first synthetic blend motor oil

2012

Valvoline launches NextGen™, the first national branded recycled motor oil

Valvoline invented the engine oil category almost 150 years ago – and we haven’t stopped pushing new innovations since.

NextGen™ motor oil is the latest in a long line of category-changing introductions.

Made with 50% recycled oil, NextGen™ delivers 100% Valvoline engine protection. NextGen™ motor oil is great for engines and better for the environment, it exceeds industry specifications with reduced environmental impact compared to non-recycled motor oil.

Naturally, NextGen™ is supported by the full force of Valvoline’s innovative marketing programs.

Welcome to the Next Generation in motor oil.

Learn more about NextGen™ at NextGenMotorOil.ca © 2013, Ashland Inc. TM Trademark of Ashland or its subsidiaries in various countries.

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MARKET TRACKER

Continued from page 10

is a big gain in itself. Plus the fact that the charge amounts have been greatly reduced. We are now in the area of less than 1000 grams and more in the 600- to 800-gram area. So we have tightened the systems up, and we have reduced the emissions from the systems, but we now get into the argument of what is really taking place,” says Atkinson.

“Even if the refrigerant has a big GWP number, the refrigerant is now less than 5% of the lifetime usage of the car. But if you use a less efficient refrigerant, and these other refrigerants we are looking at are less efficient, what happens is that when you run the system, the tailpipe emissions go up,” explains Atkinson.

“You don’t get anything for nothing. So the question at hand is, when you look at the lifetime of the car and the tailpipe emissions when using the A/C system, it far exceeds what the direct benefit is of the refrigerant. So here we have done all these things to improve the efficiencies, but we are still considered the bad guy because we have a bad GWP number,” he adds.

As if the question of the right refrigerant weren’t enough, OE makers also face a system efficiency challenge in AC17, the EPA’s new drive cycle for A/C fuel consumption, required from 2017-2025. The AC17 regulation prescribes a lengthy test as of 2017, although some engineering analysis is permitted in lieu of baseline test data. For 2020-2025, AC17 test data must demonstrate reduced fuel consumption to receive EPA CAFE credits.

EPA’s A/C-related credits cover CAFE credits for solar/ thermal upgrades from glass, reflective paint, parked-car ventilation in hot soak, and a list of vehicle technologies.

They include: reduced A/C reheat, default to recirculated air in ambients above 75°F/24°C, improved evaporators and condensers, more efficient blower motors and compressors, and compressor oil separators to reduce energy from oil circulation through the refrigeration.

It is clear that there is much more research in the offing before we get to a refrigerant that significantly reduces global warming potential safely, efficiently and economically. But that Holy Grail appears to be getting closer with every summer that passes.

Meanwhile, another SAE CRP continues to work on AC6, a Mexichem-proposed blend of 85% R-1234ze, 9% R-134a, and 6% R-744 (with carbon dioxide used as a refrigerant). The blend is designated R445A by the ASHRAE (American Society of Heating, Refrigeration, and Air Conditioning Engineers).

The GWP number of AC6 (R445A) is about 135, which is within the European Union (EU) regulatory limit of 150; the latter figure is generally accepted worldwide as the top number for a low-GWP refrigerant. Although the U.S. EPA doesn’t require a low-GWP refrigerant at this time, it does provide CAFE (Corporate Average Fuel Economy) credits for its use.

The R-744 content of AC6 (R445A) raises the question of selective leakage from the system, and as the highest-pressure ingredient in the blend, it has the highest potential leak rate.

A leakage model in the CRP data shows there would be just a 5% performance loss if the R-744 level dropped from 6% to 2%. If the CRP identifies sufficiently improved hoses, it believes a seven-year service life would hold, and that would be a satisfactory period for the blend to be acceptable.

The automotive aftermarket and OE assembly lines have never had to work with a zeotropic blend, i.e., one in which the composition of the ingredients changes during the refrigeration cycle, as does AC6 (R445A). The CRP has had to consider the possible ways in which a system could accurately be charged. And because R-744 is so different from the other ingredients, a separate injection during the refrigerant charge event is being evaluated.

Part of the blend’s appeal is its performance as a heat pump refrigerant in a vehicle in which the refrigeration system cycle would be reversed. A heat pump is used on the newly introduced EV from Renault, called the ZOE, to reduce use of resistance heating, which has a greater effect on vehicle range.

A heat pump also could help gasoline and diesel engines – whose efficiency has been improving, so there is less waste heat SAE International MRB CRP Announces Progress on for cabin comfort and window defogging/ defrosting. Concept testing AC6 (R445A) New Alternative Refrigerant in heating mode showed it has higher The SAE International (SAE) MAC Refrigerant Blend Cooperative Research Program capacity than R-134a and would provide (MRB CRP), comprising a group of leading global vehicle OEMs plus Tier One supheat at lower ambient temperatures. pliers, has continued its assessment of the operating, technical, and safety performance “The other issue at hand is, if you go of low-GWP blended refrigerants (AC5 and AC6) developed by Mexichem, and based back and look at our MAC service reports, upon R-1234zeE. we used to have to service vehicles up to At meetings held in Paris on 3rd-6th June 2013 the team gave extensive review twice per year because of A/C leaks. As time went on, we learned more and more to Phase 3 of its detailed fault-tree analysis, which is focusing on blended refrigerant about the environmental issue and how AC6. MRB CRP has already reported on the reduced flammability of AC6 as compared we could improve the systems,” explains with R-1234yf. To refine this fault-tree analysis, two additional programs of experimental MACS technical advisor Ward Atkinson. work have been commissioned for execution over the next three months, including trials Atkinson was chairman of the SAE control to extend the understanding of the real-world flammability characteristics of AC5, AC6 and standards committee for some 40 years, R-1234yf. during which time that SAE committee The MRB CRP team also confirms its intention to issue a technical White Paper wrote over 50 standards. He retired this past March and is now a technical advisor for these blends, based upon the information previously reported at SAE Thermal to MACS. Management System Symposium (TMSS) in October 2012, and more recently updated at MACs is currently running a 2013 field the UNEP Round Table on New Technology in Refrigeration and Air Conditioning, held in service update which has revealed vehicle Milan on June 7, 2013. This White Paper will be available on the SAE website this month. emission rates are now down to about 15 SAE International is a global association of more than 138,000 engineers and related grams a year. “We are now looking at not technical experts in the aerospace, automotive, and commercial-vehicle industries. having to go in and service those systems for anywhere from five to nine years. This

T

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JOBBER NEWS / JULY 2013

13-06-28 1:28 PM

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13-06-27 8:11 AM

MONEY & MANAGEMENT

Is This The Right Time To

Sell Your Business?

W

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation.

Mercantile is a mid market M&A brokerage firm. Contact Mark at mark@mercantilema.com or www.mercantilemergersacquisitions.com.

14

P14 JULY Finance.indd 14

ith the economy languishing in Canada, many business owners are wondering if this is the year to consider selling their business.

There are five specific reasons why it would make sense to sell sooner than later.

There are many factors that determine a best timing for selling a business: the financial condition of the company, valuation, growth cycle, profit history, and the current market. Usually the best time to obtain the highest price occurs when sales and earnings are good and trending upward with a history of good performance.

This gives buyers confidence in projected future earnings.

Value is dynamic, and proper timing makes a big difference in the price paid for business acquisitions. External factors such as the economy, industry trends, stock market volatility, competition, investor confidence, interest rates, and geopolitical considerations are cycles of constant change that impact value. Internal conditions within a company also change – often in combination with external factors, but sometimes independent of those factors.

So how should you determine if 2013 will be the right time for you to sell your business? The following are five factors for Canadian business owners to consider.

(1) F irst, get a business valuation to determine what your business is worth in the current market. This is an initial step in determining if a sale would meet your objectives. You do not need to pay for a valuation. An accountant or an experienced mergers and acquisitions professional can work with you in determining value.

(2) U nderstand that the current status of the mid-market business marketplace in provinces like Ontario is attractive to investors due to continued prosperity and growth in the province.

The same applies to Alberta.

These two provinces will pop up on a lot of radar screens as places to relocate or expand for businesses.

(3) B uyers in every category are looking for alternatives to traditional investment avenues.

They are looking for stability, better predictability, and control.

Business acquisitions offer all of these and can also offer a better return than traditional investment opportunities; most of Canada is a prime target because of future economic expectations and long-term outlook.

(4) T he capital gains tax rate is presently at a historic low. Business owners considering

a sale should sell before the budget of 2014. This is when the Small Business Gains Exemption is expected to change dramatically. The current Capital Gains Exemption allows every bona fide shareholder the first $750,000 tax-free.

(5) M ost importantly, even in our current economy, buyers exceed sellers and we have a robust small business exit market for now.

The time will come when the flood of babyboomer business owners ready to sell will outweigh the ready buyers.

Also fuelling the market are several different categories of buyers looking to put their money to work by acquiring profitable businesses in areas with a good economic future: • Early baby-boomer corporate retirees • Management-level refugees who have suffered a downsize, and who typically have severance pay or pension allocations to invest and are looking to go into business for themselves • Foreign buyers who see Canadian businesses as investment opportunities while the dollar is valued lower against their own currency • 30-something up-and-comers aggressively buying and building • Strategic buyers, both public and privatelyheld companies, who are actively acquiring smaller firms as part of their strategy for quick growth and innovation (Merrill Datasite, Dec 2013) • Investment buyers, such as private equity groups, who “are going down-market” (Merrill Datasite, Dec 2013) and are seeking add-on acquisitions in the lower middle market for their investment portfolios • Blue-collar workers who have been laid off and who are also looking to “buy a job”; these tend to be smaller technical service companies With all categories of buyers in play, historic low interest rates, and government working to make credit more readily available, the capital gains tax rate at its most favourable in 40 years, and given the positive future outlook of the Canadian economy, it appears to be an excellent time for business owners in Canada to explore their opportunities for exit.

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13-06-27 8:13 AM

COVER STORY

SOUTH SHORE

SUCCESS STORY

2013 Jobber of the Year The Letendre Family and the Team at Groupe Maska The Letendre Family and Groupe Maska have grown and prospered for more than 60 years.

By Andrew Ross

It’s one thing to build a successful business. It is quite another to keep it successful and growing as it is handed down from one generation to the next.

The Letendre family’s Group Maska Inc. operation, headquartered in the bustling small city of Saint-Hyacinthe on Montreal’s south shore, and now boasting six branches, is proving that it has what it takes to not only make the intergenerational transition, but to thrive on it.

Continued on page 18

Three generations of the founding family: Eric Letendre, Martin Letendre, Aurel Letendre, Roger Letendre, and Simon Letendre.

16

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JOBBER NEWS / JULY 2013

13-07-04 11:13 AM

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13-07-03 8:33 AM

COVER STORY

Continued from page 16

G

roupe Maska has been a member of Uni-Select since 1996 when, on the heels of a departing Autopoint shareholder, the network was looking for a new partner in the region.

The relationship has blossomed.

More than just a member, Groupe Maska has become one of its most avid supporters and promoters, having signed up a significant proportion of Un-Select’s Quebec banner program members.

There’s no magic to it: hard work and commitment to the customer have kept Groupe Maska growing and finding new opportunities for more than 60 years.

Now into its third generation as Roger Letendre begins to hand increasing responsibilities to his sons Simon, Martin, and Eric for the diverse Groupe Maska operations – comprising automotive, heavy duty power, and power generaoriginal 1,110-square foot operation started by Aurel Letendre, shown at right (second from left) with his tion divisions – the beginnings The Concorde Automobile colleagues before departing to start Maska Auto Electric. under Roger’s father Aurel were modest indeed. Aurel, who will turn 90 next January, still comes into the head office every day and continues to be an active presence within the business; he remembers well the company’s modest early beginnings.

After cutting his teeth in the post-war era at Concorde Automobile, a GM dealer, in 1950 he decided it was time to forge ahead on his own.

Armed with little more than a promise, a bicycle, and his skills as an auto-electric expert, Aurel Letendre made sure to keep on good terms with his former employer, but rode off to his 1,100-square-foot shop, steadily building a customer base, and shaping what he hoped would be a prosperous Aside from the main branch, operations include Drummondville (second row left), Sorel-Tracy (third row future for his wife Monique left), as well branches in Cowansville, and Boucherville. A newly constructed Granby location (at right and and their newborn son, Roger. showroom), is bright and spacious, providing ample room for displays and inventory.

Aurel makes it clear that he competitive environment. did not doubt his chances for success, but there were some Sometimes in the early days, it was necessary to make tough times in the early years, and he found some goodwill some tough decisions. “When I started I didn’t have any from his former employer helped greatly. money, so I sold my wife’s piano to be able to pay ACDelco “I got married in 1949, and opened [the shop] in September for batteries. And I promised her that the first time we had 1950. At the time I didn’t have any money. That first morning, the money, I would buy her a new piano.

I just had the key and a bicycle.

“And then she started doing the books for me, so she “The boss where I used to work would say, ‘Aurel, anything didn’t have time to play anyway,” he says with a smile. “But you need, you let me know.’” One can only imagine how rare such a good relationship would seem in today’s hyperContinued on page 20 18

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JOBBER NEWS / JULY 2013

13-07-04 11:15 AM

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13-07-02 8:17 AM

COVER STORY

Continued from page 18

in a few years I did buy that new piano, and she started playing again.” Roger Letendre told me later that whenever she hears that story, his mother cries.

The 1950s and 1960s were a period of expansion, with branches added in Granby, Drummondville, and Sorel-Tracy.

Aurel also started Maska Auto Spring, a separate truck suspension specialist business in nearby Saint-Rosalie, in 1954. (There was a family expansion too, with Louise, Pierre, Andrée, Élaine, and Manon arriving in due course.)

But one of the firm’s biggest transitions to that time – the first succession – occurred in 1970. Precipitated by the coming major changes to the tax code regarding capital gains, Aurel split the enterprise between sons Roger and Pierre, five years his junior; Roger took over what was to become Groupe Maska, while Pierre took on the growing Maska Auto Spring business, renamed Ressorts Maska after Bill 101 enforced French language rules, and another spring shop in Trois-Rivières Electrical rebuilding is still a going concern (top). At left, Martin Letendre demonstrates named Centre du Ressorts T.R. Roger recalls that the transition was a tough the diesel particulate filter cleaning device. Aurel proudly remembers every successive one. While he had grown up with the business, expansion, and the struggles along the way, too. there was still much to learn. And Aurel, who had a very “I was young, so I knew everything,” he says with a laugh. traditional approach to both business and parenting, was a “To work with your dad is something special. It is a hard tough taskmaster for the then-20-year-old Roger, thrust suddenly school, learning with your dad, but it’s a rewarding experience. into the position of owner.

Your dad always wants you to perform at 100%.”

Congratulations to the Letendre Family and the entire team at Groupe Maska Inc. on being awarded the 2013 Jobber News Jobber of the Year.

From your friends at 20

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JOBBER NEWS / JULY 2013

13-07-04 11:15 AM

The large diesel operation is hard to miss. Branches in Cowansvile and Boucherville continue to show Groupe Maska’s expanding footprint.

He still values those lessons, but also recognizes that times have changed, and he’s trying to take a more collaborative approach to the transition.

“I was on both sides. I learned with my dad, and now I am trying to have my kids learn from me. The worst thing is that the older man has more experience. The hardest thing for you is that the old man is probably right more often than he is wrong. So it’s a hard way to do it, but it is worth the effort, because no teacher would take the time to push you as much as your dad would.”

A key point in the Letendre succession has been that one generation is still around during and after the handing over of ownership. While some owners hang onto power, responsibility,

CONGRATULATES GROUPE MASKA ON BEING NAMED JOBBER NEWS JOBBER OF THE YEAR!

Continued on page 22

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13-06-26 16:54

13-07-04 11:16 AM

COVER STORY

Continued from page 21

and the rewards till they exit the business, Roger Letendre has encouraged a gradual approach – albeit one that provides incentives along the way.

Martin, who is now 27, became responsible for the diesel and generation business six years ago. Simon, now 23, is just taking on the automotive side of the business. Eric, 30, is most comfortable behind the scenes, and is an expert at keeping operations and logistics running smoothly. (In June, both Martin and Simon were appointed vicepresidents of their respective divisions.)

But it all starts with the right question.

“First of all, you have to find out whether your kids are going to like it or not.”

Working summers and weekends gives them a taste, he says, and he has been very open about his plans for succession.

“If they wouldn’t be happy, there’s no use to make a succession plan.

“You have to ask the question. After realizing that they are interested, you have to interest them more on a financial basis.

It is part of the reward system; if you put in the effort, you get more money.

“It’s part of the ongoing situation. They need rewards. They need pride. In many family-owned companies, you would work for your dad for 30 years before you would get shares. He would be the president, vice-president, and everyone on down to employee number 15.”

Groupe Maska’s large diesel business is focused exclusively on engine and fuel system work, supported in part by its diesel injection rebuilding capabilities.

While Roger approaches the topic with humility, it is clearly an approach that has been working. The diesel business that he brought onstream in the early 1970s has continued to grow, while the generator division, once a small sideline, is a burgeoning responsibility. Automotive has prospered – they recently acquired a branch in Boucherville and opened a new building housing the Granby operation – bringing the branch total to six.

He attributes the company’s success to hard work, and taking a modest approach to expansion. The main headquarters in Saint-Hyacinthe serves as a good example, a metaphor in bricks and mortar; the story of successive expansions are written in the clean-swept concrete floors.

While it’s not obvious from the outside, that first 1,100-square-foot building is still part of the structure. It’s been a case of expansion piece by piece: simply knocking a hole in the wall and pushing out to the neighbouring building, and so on and so forth. Now the operation runs at approximately 50,000 square feet.

Roger says their careful approach has served them well.

“Some people are putting up new buildings and fancy things.

But whenever the interest rate goes up, like it did in the early ’80s, or the economy doesn’t go too well, you’re overextended with bricks and walls.”

He’d rather invest in inventory and people. Accordingly, Roger, who recognizes that learning at the knee of your father Continued on page 24

22

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JOBBER NEWS / JULY 2013

13-07-04 11:16 AM

Congratulations to the Letendre Family and the Entire Team at Groupe Maska on the Jobber of the Year Award

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JOBBER NEWS / JULY 2013

joy p23.indd 23

23

13-07-08 7:35 AM

COVER STORY

Continued from page 22

has its challenges, pulled former Uni-Select sales manager Richard Roy out of retirement to act as a consultant, with the primary task of helping Simon learn and grow quickly.

“He brought me in to help coach him and help his youngest son grow as quickly as possible in the business sense,” says Roy. “That takes a lot of vision, and it takes some courage. He had to have the trust in me to make sure that I would offer the right counselling based on how he sees business. He has to trust me and he has to love his son in providing him with the best possible help to make sure he is comfortable.”

“If you tell something to your son, maybe he will get some of it,” interjects Roger. “But if somebody else tells him something similar, it is different.”

“And it’s quite something on Simon’s part, too,” adds Roy, “but he had to be humble enough to know that he would have a coach for a couple of years. It is a special person to go along with that. Some young guys might not.”

Roger Letendre says that the approach needs to be different, because times and the business environment are different.

Starting out the way his father did is not really an option anymore.

“When you look at business in this town, most of it started in the 1950s. A guy started with a small hardware shop, and today he’s a Rona. Another started with a small furniture shop, and now he’s a big furniture outlet. Another was a small drugstore owner, and now he’s a Jean Coutu. How can you start a drug store today? How can you start a hard-

24

p16, 18,20,21,22,24 JOY.indd 24

The main branch in Saint-Hyacinthe reveals a traditional, inventoryfocused approach that is effective and efficient.

ware store? How can you start an auto parts store? There’s no room. You have to be part of a group. If they already exist in your town, you’re not going to make a go of it.

“There has been consolidation of the business, in every industry, which prevents people from starting on their own with small operations. The room is already full. So what you need to do is make sure that the existing business will continue.”

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13-06-27 8:18 AM

MARKET FEATURE

Filters:

Brand Value Up, DIY Down

By Steve Pawlett

T

here are some interesting moves afoot in the world of aftermarket filters that could make these commodity items more profitable, even as replacement rates continue to drop.

Working to meet the growing demands of OEs, North American aftermarket suppliers are increasingly manufacturing air, fuel, and oil filters that are more durable and provide better filtration capacities, resulting in extended replacement intervals.

Nowadays, according to a 2011 Frost & Sullivan report, the average age of an engine air filter is approximately two years, and this is steadily increasing. Another factor impacting aftermarket filter sales is the growing use of synthetic oil, which has an extended drain interval and thus delays the need to replace oil filters.

In addition, in-tank fuel filters and modular fuel systems are expected to reduce the aftermarket for in-line and screwon fuel filters. Shipment of transmission filters is also likely to decline, as suppliers increase durability of this product to cater to the increasing life of transmission fluids.

However, the increase in average annual miles driven per vehicle, coupled with aggressive advertising of oil and oil filter changes, are expected to make up for reduced need-driven sales.

“There is a lot of ‘tribal’ knowledge out there around oil filters,” explains Fram technical training director Jay Buckley.

“Basically, a filter is a can that screws onto the vehicle, and the 26

p26,28 MARKET Feature.indd 26

only thing that makes a difference between a good filter and a bad filter is the media inside it.”

“Many technicians assume their customers just want the cheapest possible filter on their vehicle, but if they wanted the cheapest filter they wouldn’t be buying synthetic oil,” says Buckley. “What’s the point of selling synthetic oil if you don’t have a filter that goes with it?”

“The use of premium oil filters is something we have to get out and promote to the installer,” explains Dale Devlin of Halton Automotive. “The consumer is always looking to protect their vehicle, so explaining the benefits of a premium filter usually leads to a sale. There are still a lot of technicians who are using economy filters with premium oils, but the message is getting out there and we are seeing more techs switching to premium brand filters with the premium oils. It’s just a matter of continuing to put the message out there.”

Continues Devlin, “We still have the ‘Walmartization’ problem, where everyone wants everything cheap, cheap, cheap. Unfortunately it’s a mentality that has really taken over.

[However,] we do find if a person is explained the benefits of a better-quality filter, most will go up to the premium brand.”

Periodic replacement of automotive filters is critical for the proper functioning of the powertrain, and as average miles driven continue to increase, this will necessitate earlier replacement of all filters.

Continued on page 28 JOBBER NEWS / JULY 2013

13-06-27 8:37 AM

Affinia p27.indd 27

13-06-27 8:20 AM

MARKET FEATURE Continued from page 26

Continuing changes in engine design are also expected to lead to more frequent alterations in air filter design, states the Frost & Sullivan report, leading to an increase in part numbers, which in turn will drive unit shipment of air filters.

Transmission filter demand is expected to profit from the increasing installation of automatic transmissions.

Interestingly, the report states that all too often, improper diagnosis of automotive problems by technicians will lead to the replacement of more fuel filters, when the problem may have occurred as a result of failure of some other related part.

A growing challenge confronting the North American filters aftermarket is the issue of counterfeit filters. According to the report, air, oil, and fuel filters are the automotive components that are most at risk of being counterfeited, and the rise of imports from countries with low production costs, such as China, Taiwan, Korea, and India, facilitate this trend.

The penetration of products that are manufactured offshore in the North American aftermarket poses challenges for domestic manufacturing by restraining filter prices. Among the other competitive trends, do-it-yourself (DIY) activity is expected to decrease due to the increasing complexity of parts, and brand recognition is predicted to assume greater importance as professional installers associate recognized brands with high quality and durability.

Among all filter categories, oil filters represent the most important part of the North American selected filters aftermarket in terms of revenue. Upward growth in average prices at the manufacturer level is expected to help boost the overall profitability of the segment, helping to balance the reduction in unit sales due to longer change intervals.

Air filters are the next most important market segment, and revenue share here is also likely to improve with the introduction of higher-priced, high-capacity air filters, which are expected to last longer. On the other hand, the fuel filters segment is likely to experience a decline in revenue share, thanks to the forthcoming shift to life-of-vehicle in-tank filters and slower technological developments in comparison to the other segments.

The U.S. cabin air filter (CAF) aftermarket is expected to grow at 11.5% in unit shipments and 14.1% in revenues between 2010 and 2017. Factors pushing growth are increasing original equipment (OE) installation, growing consumer awareness, and escalating health concerns.

The growth in the particulate cabin air filter segment is expected to be somewhat slower than that of combination filters, as consumers are likely to switch to the latter as awareness of their advantages grows. Combination filters are priced on average 25 to 40% higher than particulate filters, boosting total aftermarket revenues.

New standout products like Wix’s BioShield 75 or Fram’s Fresh Breeze with Arm & Hammer Baking Soda are gaining market approval and raising consumer awareness at the same time. These innovative products are prime examples of how product differentiation in this market is a proven route to business growth.

Fram recently launched a line of oil filters to be wholesaled through WDs to commercial customers. The line consists of an entry-level filter, a mid-level filter, and a premium Fram 28

p26,28 MARKET Feature.indd 28

Synthetic filter. Not available in retail stores, the new line is designed specifically to help automotive repair shops differentiate themselves from their retail competition.

“It’s about education and teamwork between jobbers and technicians. Any one selling semi-synthetic or synthetic oil should be selling a premium oil filter to provide the proper engine protection. Otherwise you really are doing a great disservice to your customer. That’s why there are now three filters to cover the entire market. We have never tried to do this before, but the OEs, with their extended drain intervals and specified high grade oils, are driving this market, so we are going to be here to service it,” says Fram’s Buckley.

Overall, increased consumer spending on routine maintenance products over the short to medium term is expected, as people choose to keep their vehicles longer in an economy that continues to be uncertain.

In the U.S., the cabin air filter installation rate in vehicles in operation was 45% in 2010, and is poised to reach 56% by 2017, significantly driving aftermarket unit shipments of CAFs. “The cabin air filter is a nice added sale, and I see more and more of them going out our doors. So I see that as a category now that is replacing the decline in fuel filter sales. Most cabin air filters are fairly easy to change, and it’s now becoming part of the regular maintenance routine of technicians to recommend during a customer’s regular maintenance visit; and consumers are getting used to that question being asked,” says Devlin.

While the prospects for the market look upbeat, there are certain challenges that are hindering market progression.

Chief among these is the need to increase consumer awareness on the benefits of CAFs. Most consumers are aware of the importance of the quality of vehicle cabin air, but are largely unaware of the fact that there is a filter on their vehicle that removes dirt and allergens from the vehicle’s interior and requires regular replacement.

“It really depends on your particular geographical area as to whether or not there are as many DIYers that are willing to open the hood and change out the cabin filter. They may take a look under the hood and decide they can change the filter themself. Others will take it to their technician to be changed, and still others may not change it at all. All these factors influence our sales,” says Devlin.

According to the Frost & Sullivan report, many technicians are not properly versed themselves in current vehicle applications that have a cabin air filter, and the time required to replace such filters. As a result, they often fail to communicate effectively to the vehicle owner that the CAF exists and needs replacement.

Jobber stores and automotive repair shops should have CAF displays in prominent locations to help raise customer awareness and increase impulse sales. The report also says easier access is expected to drive DIY activities and sales through the retail channel.

“It’s an ongoing education process for us. In the last six to eight months, we have seen a lot more sales happening as a result of the media exposure and discussions with customers and techs, so it is happening. We just have to keep reinforcing the story to complete the mission,” says Devlin.

By prioritizing consumer awareness campaigns, jobbers and automotive repair shops can do their part in raising consumer awareness over time, which will go a long way towards helping boost aftermarket filter sales.

JOBBER NEWS / JULY 2013

13-06-27 8:46 AM

TRANSBEC p29.indd 29

13-06-27 2:19 PM

For the Counterperson

July 2013

Knowledge Building:

Catalytic Converters:

Clearing The Air

By Steve Pawlett

C

hoosing a replacement catalytic converter is much like choosing which cup the street busker has the loonie hidden under: they may look alike, but not all catalytic converters perform alike.

“Catalytic converters have become the brake pad of the exhaust market, where the variance in quality is so drastic, as is the variance in pricing, that you can’t be sure of what you are getting,” explains Cat Exhaust Systems president Walter Fantin.

“I believe that the market is now beginning to correct itself, as everyone begins to realize that going with the least expensive product is not your best bet. Cars are coming back with their engine lights on and codes are being triggered. The product just doesn’t function as it should.”

With the new OBD-II emission standards, Fantin says he is seeing technicians becoming more cautious about just buying the cheapest product out there. “They want a product that will function properly. So they are now ordering higher-quality cats, because they are worried about comebacks from using a cheaper product. The less loaded the converter, the worse it’s going to function.

It’s the expensive precious metals that do all the work. That is why the prices can be so drastically different.

“When you have five manufacturers and all five are showing a different price, how do you know what you are getting?” Fantin continues. “A lot of the time they are not the same unit. I am finding that many technicians are now looking for suppliers that are more knowledgeable, in tune with the market, and a little more specialized and able to provide the quality products they are looking for. The days of saying, ‘Yeah, send me whatever,’ are pretty much gone now.”

Pat Bruder, co-owner (along with brother Peter) of Exhaust Direct, agrees. “We definitely see a push for the better converter. The Ultra-load converter has increased

in sales probably bet ween 35 and 50%, and we are seeing sales of the cheaper units decrease at the same rate,” he says.

Bruder feels it has a lot to do with the labour rates and the simple fact that a lot of shops just don’t have as many staff anymore, so these shops have a real hard time with recalls. During the recent economic slowdown a lot of smaller companies disappeared, leaving the more efficient full-service shops still standing but a little leaner staff-wise.

“One of the shops I supply used to have five guys; now he has two guys and he is still one of the biggest shops in his area. He only orders quality cats, because he can’t risk having one of his two guys doing returns. Our premium converter sales for the aftermarket are up probably 50%,” Bruder says.

“Customers are looking for quality and reliability in replacement parts now, and when you have a good mechanic you have to pay them well, and if you put a lousy converter on and you have to tear that out, now you’ve lost every bit of money you had from that job. Not to mention your reputation, because the customer will blame you for the converter problem, even though it has nothing to do with the mechanic putting it on,” he explains.

“We still see some less expensive versions of catalytic converters out there using a lower loading than they should be using. But now with the new OBD-II emissions standards in Ontario, if your engine light comes on and it’s a result of the inefficiency of the catalytic converter, you really have to find the problem, and in some cases if you don’t put a good high-load catalytic converter on, that light won’t come off,” Continued on page 32

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13-06-27 8:30 AM

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Continued from page 30

explains Guy Trottier, product manager for Ultra Fit. “The new tighter OBD-II standards will eliminate a lot of the lowload converters out on the market.”

As Pat Haynes, product manager, catalytic converters, North American Aftermarket, Tenneco Inc. (Walker Emissions Control brand), explains, “The key drivers for the converter market are in fact the aging vehicle park and tighter emissions regulations, combined with increasingly rigorous vehicle inspection programs, and the close, active monitoring of converter performance

by OBD-II systems. Each of these factors will continue to drive growth in the replacement converter category.”

Unit sales of aftermarket direct-fit converters grew 40% between 2010 and 2012, according to MECA (Manufacturers of Emissions Controls Association). “Key factors that have been raising the demand for direct fit cats from the repair community include the time savings and convenience of a bolt-on repair, as well as the increased coverage and availability of these units.

Tighter emissions regulations also have played a part by pushing vehicle manufacturers toward manifold converters, which help clean emissions more quickly and thoroughly by being positioned closer to the engine. Direct-fit replacement converters are needed for these applications as well as for many smaller vehicles, including imports, with very tight under-body ‘packaging,’” adds Haynes.

“Some of the new style of catalytic converters that we see coming in now are very hard to do. We have some converters that are actually welded to the exhaust manifold of the vehicle.

We made one for a Subaru that has almost 10 legs attached to it. It’s very complicated, with two inlets and one outlet.

It comes in through a pipe on each side of the engine,” says Trottier.

“As catalytic converters continue to get more complex, shops won’t be able to rebuild in-house like they used to. Some OE converters are only four or five inches long. That’s why we have to go to a higher loaded substrate to put into the converter.

It’s not like you can just order a eight- or 10-inch universal catalytic converter and use it on everything anymore,” adds Trottier.

While direct-fit units are generally more expensive, they have the added benefit of enabling more service providers to perform these repairs, rather than subbing out the jobs to muffler shops and other specialty shops that have the fabrication and welding equipment, and specialized skills needed to install universal converters.

“I have customers who order mainly universal product, because they have the skills to make it work on all kinds of applications, while other customers won’t touch a universal unit because they don’t want to mess around with it and just don’t want to deal with that part of it,” explains Fantin.

Bruder agrees. “We have some shops, depending on their location, that are heavier on the direct fits, while others are more on the universal. Haggling on pricing can be two out of 10 in one shop and eight out of 10 in another. It really depends on the shop’s location.”

According to Mississauga, Ontario-based Speedy Muffler Shop owner Mauro Briccardi, “Depending on the age of the vehicle, a direct-fit converter may not be a suitable option for the customer. In our shop, if we are dealing with a 10-year-old vehicle, the customer is often not willing to invest as much into a vehicle that is nearing the end of its useful life, so in those cases we will go with a quality universal cat at a more

reasonable cost to that customer.”

Much like many other components on vehicles today, the exhaust system is becoming more complex. “You can’t just bend a pipe and put it on anymore. Now, about 80% of our business in our particular marketplace is direct fit,” says Scott Scherr, owner and sales manager of Warehouse Services Inc. in Edmonton.

“In other areas where there is an older vehicle market, you will find a stronger market for universal components, but out here with the oil fields in our back yard, we have a much newer vehicle park. We are often dealing with pickup trucks that need parts within months of being released. We are in what we call the ‘Alberta Bubble,’ just because of the oil fields and the work they are involved in,” explains Scherr.

“In Canada you don’t need to have an EPA approval to sell a converter; however I won’t sell anything that is not EPA approved,” says Fantin. “Without that approval I don’t know what I am sending people. I want to be sure it is OBD-II approved and it meets all the regulations so I can sell the product with confidence. If it costs a few dollars more, there is good reason for it.”

Haynes advises that converter development now requires not only catalyst expertise, but also extensive insight into manifold and gasket design. “Overall fitment also becomes much more important, due to manifold runner configurations and positioning of the O2 sensor. In general, repair providers should be wary of any aftermarket manifold converter that deviates significantly from the OE design.”

In terms of overall sales, unit costs are expected to continue to rise due to the increased engineering, materials, and production content of these units. According to Haynes, “Replacement costs are increasing, and for multiple reasons. Tighter emissions standards require more precious metals content and other rare earth elements per converter. We’re also seeing increased substrate volume and more sophisticated washcoat technologies. Additionally, the market is shifting to direct-fit converters, which involve ever more elaborate routing and other cost-intensive design and manufacturing features. Manifold converters also are becoming more common as well. These units add to engineering and production costs since they incorporate both the manifold and catalyst.”

Fantin explains, “I wouldn’t be going for something that is being built without EPA and OBD-II approvals. If you don’t have enough loading you are not purifying that exhaust, so the rear oxygen sensor is going to trigger the computer that you are having a converter deficiency and the vehicle will end up failing the emissions test.”

He continues, “A few years ago the pressure was on pushing the price down, even though prices weren’t really high, relatively speaking. Converters are expensive no matter what, because they contain the precious metals.”

Customer-driven jobbers and repair shop staff should share this knowledge with their clients to educate them on all the reasons why they should invest in a quality aftermarket catalytic converter and avoid the three-card Monty game of buying on price alone. By taking the time to educate customers on the value of investing in a premium direct-fit or universal catalytic converter, you will empower them with the knowledge they need to make the right choice.

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13-06-27 8:31 AM

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Editorial Comment

YOU ARE NOT ALONE

W

NEXT MONTH

Building Sales for Import Nameplates.

Headlines in August: Chassis and Driveline Trends, Brake Parts, and Emissions.

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hile sitting in Roger Letendre’s office talking about all things great and small, the topic of team, and succession, and the role of the entrepreneur came up.

I offered the opinion that the jobber business today, as a people business, requires as much cooperation within the four walls that make up the operation as it does connection with the customer and the supplier.

I didn’t mean it to sound like something a flower child might say – I’m no faded hippie – but even I have to admit that there was a note of New Age in it.

While he didn’t disagree directly, Roger Letendre did offer this: As an owner, when you unlock that door in the morning and look around and go into your office, you are alone. And he said it with such gravitas that I had to believe that there were many times, over the past four decades when he has been at the helm of Groupe Maska, that he has very much had to rely solely on his own counsel.

That will be a familiar feeling for anyone in a position of authority.

It reminded me how profound the feeling of responsibility and aloneness can be even for those surrounded by family, and a staff that is practically family.

When it comes to the tough decisions, you can consult with as many people as you like – trusted friends and advisors, family members young and old – but in the end, it is up to you to decide which advice to heed, which to toss aside, and which direction you are to steer the ship in.

Even veteran business owners can still find themselves having to swallow hard at major investments and address business challenges with acuity and decisiveness.

The importance of smart decisions does not diminish as a business gets larger and you gain experience. In fact it becomes imperative. The bigger the ship, the harder it can be to shift direction.

I am reminded of the story of a 2001 dispute between William Clay Ford Jr. and then-CEO Jacques Nasser about which direction the Ford Motor Company should be moving. The company was in the midst of falling profitability, a price war, and lawsuits launched over a controversial performance evaluation system.

Mr. Nasser stated his displeasure with seeing so many “white faces in the crowd” at a staff assembly and vowed to have that change, raising the ire of many long-term employees who cried “reverse discrimination.”

The story goes that as the power struggle reached its height, Mr. Ford walked Mr. Nasser outside the head office, pointed to the Ford Motor Company sign, and told him that only when his name was on the building would he get to make “those kinds of decisions.”

While that story is probably apocryphal, Mr. Nasser’s departure was not.

This industry is full of family operations that have managed to navigate troubled waters. And, as much as I believe Roger Letendre’s comments about the sometimes lonely life of the owner, I would hope that you all have some partners in life and in family and in business to help you choose the right path, as he does.

The days of having to rely solely on your own devices have passed. That’s true for you and it’s true for your customers.

The world is a more complex place and it is important to use all the resources at hand to help you make the decision.

Going it alone, completely alone, is no fun, and it’s probably not even wise.

—Andrew Ross, Publisher and Editor aross@jobbernews.com, Twitter: Andrew Ross (@JobberNews) JOBBER NEWS / JULY 2013

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