Plain Talk: The Delco Question By Rob Buksar e a ‘ es I have a couple close friends and customers who have © , just decided to spend tons of money putting ri 7 | — Delco remans in their inventories. Neither shop felt good about this new activity. When I asked, both claimed they felt pressured to get involved with Delco because Delco had already begun to pull major cus- tomers away. When my guys approached the customers they lost to Delco they asked what I thought was the obvious question: “If we stock Delco will you buy it from us?” Before I go any further I want to make a couple issues really clear so no one gets offended. First, I am not criti- cal of anyone who has, is or plans to stock and resale Delco units. Second, in similar circumstances I’m confident I’d do about the same. You decided to buy and sell Delco because you thought this would help sustain your present business and re- gain some of the lost. Outwardly this appears to be reasonable thinking. In some cases it will help recoup a little of what’s been lost. Just don’t over- look the important issues here: Will this really make you any money? Will this promote or help promote your present business objectives? The answers to the above are go- ing to be different from shop to shop. A diverse operation taking a line of Delco parts on will probably be an asset. What’s diverse? In business being diverse means your revenues are derived from more than one source, activity or line of merchandise. These days having multiple income centers of diversity is probably the best place to be. The most vulnerable and risky place is single line or single dimension. If rebuilding starters and alternators is all you’re doing, or winding armatures for that matter, I sure hope long-term plans are not on your agenda. By and large rebuilding as we once knew it is over. There is no way we can trade all of our tomorrows for even one yes- terday. To survive we will all have to move with the avalanche of change roaring downhill or resist and be bur- ied by it. So what happens when a single dimension rebuilder brings Delco in? How’s unrolling the red carpet so the fox can enter your hen house in style sound? At the very moment you begin to promote Delco remans, their war- ranty, name recognition, and availabil- ity, you back seat your own activity and brand name. Have you ever stopped to really consider this? If you’ ve been in business 10 years or more, custom- ers have become familiar with your products and services. That’s your “brand name” and it’s representative of you and your operation. You’ ve all seen this when cold-calling customers. When asked who does their rebuild- ing the reply was almost always the same—‘We get ours from ‘This or That Electric’ —they have done our work for years.” Once Delco creeps in all begins to change. When asked the same ques- tion the customer replies, “Usually we pick our units up at the International Dealer since we’re there so many times during the week anyway. They handle Delco units. If they don’t have what JUNE, 2001 we need we can always go down the street and get it. Everyone carries Delco these days. If all else fails we can send the unit out to be rebuilt by ‘This or That Electric.’ We used to deal with them all the time. We kind of got away from them once we started us- ing Delco instead of their rebuilts.” Another old customer and friend related his Delco story with me. He said his shop had a large nationwide trucking company’s reman business. They maintained this business for 14 years successfully. It comprised about 30 percent ofthe shop’s activity and 40 percent of the profit dollars. Delco sales got to someone at the trucking firm’s corporate headquarters and convinced them that switching to Delco was the way to go. Now keep in mind there was never a price or quality is- sue. Actually, the local brand was $20 a unit cheaper with virtually no war- ranty problems. Nevertheless, the in- credible power of the OEM name and national warranty at a comparative price, carries an extraordinary punch. The rebuilder bought a ton of Delco so he could continue to service his trucking customer. He figured ifhe could hold on to the customer, making something would be far better than los- ing everything, and he’s right! Although my rebuilder is now running around like crazy trying to replace the 30 percent of rebuilding activity and thousands of dollars of profit margin lost due to the Delco transition. So what’s the bottom line of all this? Hell if I know! It sure seems a small single dimension rebuilder is damned if he does but damned if he doesn’t. Keep in mind Delco always wanted this market but couldn’t com- pete because of their own domestic costs. Now with NAFTA and global- ization well-rooted, Delco domestic Page 1 of 2