Automotive Parts
Terrence J. Keating, the CEO of Accuride Corporation, a $1.4 billion company that supplies parts to the automotive industry, was attending a conference held by the Heavy Duty Manufacturers Association in January 2006. At the conference, he came across a Chinese company that was advertising a brake drum that was a clone of an Accuride product. The brake drum was not only a duplicate of the Accuride design, it had the same part number and the brand name, “Gunite,” which Accuride gave to the original product.
Keating described this experience in testimony before the U.S.-China Economic and Security Review Commission in July 2006. In his remarks, Keating said that Accuride has been forced to compete against these types of counterfeit products because China does not provide adequate protection of intellectual property rights. While the lost sales resulting from this type of illicit competition obviously adversely affect his company’s revenues, the implications go much farther than that. “The product may be a duplicate in style but the quality of some of the imported product falls far short of the standards required to protect the safety of the American motorist,” he told the commission.
Keating said that warranty claims filed by customers because of defects in knock-off products that falsely appear to be manufactured by his company underscore the safety issues such products introduce to the market. In addition to the safety issue, he said that the warranty claims and the costs to identify and get counterfeit products off the market have a negative economic impact on the company. “It is very difficult to estimate the negative impact of these knock-off products in lost market share, damage of brand name and overall value, but it is fair to say it is very significant.”
