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Risky Business - Counterfeit and Fake Parts

Nov. 15, 2007
The savings can be short-term when replacing OEM parts and assemblies with ones of questionable origin.

There are numerous and increasing challenges to food processors these days. Bad replacement parts for your machines shouldn't be one of them.

One danger from a failing circuit breaker. The other danger is a counterfeit one may not fail when it's supposed to.

Counterfeit parts, also known as fakes, bandits or tramps, are typically new or replacement parts that are deceptive in some fashion. They may be sold separately or incorporated into assemblies or fabrications offered for sale. They may be passed off as the real thing or may be openly offered to food plant managers as "just as good as the original equipment manufacturer's (OEM's) parts -- but at lower cost."

Counterfeit parts may be falsely branded, imperfectly manufactured or refurbished, carry unearned certifications or quality designations and be poorly tested - if tested at all. They may be visibly different from legitimate parts, or they may appear identical. They may work satisfactorily or they may fail disastrously, harming operators or damaging equipment or facilities. They may compromise products or processes, and seriously impair consumer safety. They're a "crap shoot," according to one OEM, and they are on the increase.

Counterfeiting and piracy of all kinds cost the U.S. economy $200-250 billion annually, according to the Anti-Counterfeiting and Piracy Initiative of the National Chamber Foundation, U.S. Chamber of Commerce. This is almost one-third of such losses worldwide. Estimates of resulting American job losses approach 750,000. "Organized crime thrives on counterfeiting," Ronald Noble, secretary general of Interpol, has been quoted as saying.

Related Counterfeit Parts Content

Given the near-universal availability of reputable branded and warranted parts, the only reason for the existence of fakes is financial. Someone somewhere in the supply chain is making an inflated profit through misrepresentation or someone else is trying to save a buck.

In most cases, the reasons they are cheaper are inferior performance and reduced safety. The results can range from increased downtime to personnel dangers - and in all cases where they are discovered, counterfeit parts void equipment warranties, some even retroactively.

"In our business, we see both counterfeit and non-OEM replacement parts," says Brad Gillispie, national sales manager-aftermarket in the Santa Fe, Texas, office of SPX Process Equipment (www.spxprocessequipment.com), which supplies such food industry products as Waukesha Cherry-Burrell pumps and valves and Lightnin mixers. "Some fabricators will try to reverse-engineer and duplicate our parts. They can get close, but they don't truly duplicate them. The parts are lacking in something - tolerances, material specification, hardness - and all those things have a lot to do with performance.

"One customer we have here in Texas was using local shops for repairs and noticed they weren't getting the life expectancy they should have out of their gearboxes," Gillispie continues. "They called us in and we found it was because of counterfeit parts. What they saved on those parts was not enough to cover the more frequent gearbox repairs."

Fakes are everywhere

The ideal part to fake is a high-cost item the value of which lies in some character or property not visible to the eye. Components with complex heat treatments, specialty machining tolerances, exhaustive testing certification and expensive compounds or alloys all present ideal opportunities for counterfeiting.

The real and the fake: The Square D 15-amp breaker on the left with the red tab visible is real. Its near-twin on the right is a counterfeit.

Likewise, assembled components needing significant or costly skilled labor are at high risk.

One common example is electrical circuit breakers. Found in plants worldwide, in essentially all electrically operated equipment as well as homes across America, breakers are critical safety devices.

"Counterfeit products pose serious health and safety hazards. They can fail catastrophically. Anyone near one of the counterfeit breakers when it explodes [can be] subjected to extreme heat, sprays of molten metal and a powerful blast," says Jim Pauley,vice president of industry and government relations for Schneider Electric North America, which makes Square D, Telemecanique and other leading brands. "Alternately, if a fake breaker should fail to trip, overload and fire may result."

While fakes have been seen for more than 20 years, few were in North American markets, Pauley says, and the lower quality of such fakes usually was evident. Over the past few years, however, the problem has grown enormously, both in the quantity and sophistication of the fakes. Recently, the scope of counterfeiting has enlarged to include other devices, and the fakes are becoming harder to detect.

After a number of large seizures of counterfeits by customs officials, manufacturers and certifying bodies, such as UL and NEMA, have begun providing awareness and counterfeit-detection training to their distribution chain and to law enforcement bodies. Others have tried to better control the distribution chain, believing non-OEM representatives are at least easier to fool and may be complicit.

Some companies and some specialized industries have managed to control the problem by limiting parts sales to a direct sale model, interacting directly with the end user. Clearly, this assumes the end user will adhere to such a supply regime. Others limit critical field service to factory-based service staff, and provide ample telephone assistance and field manuals to processors' in-house maintenance staffs.

Wenger Manufacturing (www.wenger.com), Kansas City, Mo., a maker of extruders, follows such a direct and controlled process. Brian Plattner, technical center manger, suggests that strict insistence on direct supply of replacements and spares from the manufacturer has helped Wenger to avoid serious counterfeiting, although their equipment is used worldwide.

Bearings especially

Bearings, in all their forms, represent an often-counterfeited class of parts. They're replaced often, and there is a broad range of both supply options and sources. Falsification of bearing identity has reached such proportions that manufacturers, major customers and testing and certification organizations worldwide are discussing a "Global Bearing Code of Conduct."

The Japanese Bearing Manufacturers Assn. has gone so far as publishing a poster showing a pair of handcuffs whose one side is a large ball bearing. The poster says, "Counterfeit bearings are illegal. They can cause injury or death. Don't produce them! Don't sell them. Don't buy them."

"We're seeing some counterfeit bearings from China," confirms Bill Bayliss, business manager-aftermarket at FMC FoodTech (www.fmctechnologies.com/foodtech), Madera, Calif. "Some bearings are very sophisticated and, as a result, very expensive. But there's a reason they're so expensive. Some customers are finding out the hard way."

Some fake bearings are obvious on inspection. Visible clues can include packaging differences, alternate countries of origin or serial number formats, differences in the look of subcomponents. Names and logos may even be spelled incorrectly. Increasingly however, the more sophisticated fakes are essentially identical under routine inspection or testing. However, the hidden differences, determinable only by experts, may have serious consequences.

Schaeffler KG, maker of well-known INA and FAG bearings, suggests these non-visible differences can include non-hardened races, use of alloys without adequate corrosion resistance or wear resistance, unserviceable seals or defective lubrication. In some cases, according to reports from major bearing manufacturers, the fakes can look "more real" than the legitimate product. In most cases, the final determination can only be made by an authorized distributor or the manufacturer.

A form of counterfeiting applicable to many devices, but of particular issue for bearings, is remanufacturing or refurbishing of worn parts. This also can be extremely difficult to detect in the field, since the parts themselves may remain correctly labeled or marked. In some cases, grades or certifications of parts may be enhanced or improved during this purely cosmetic reworking job. Again, significant expertise may be necessary to detect these fakes before they fail in use.

Sometimes, the problem is not counterfeit parts but merely substandard non-OEM parts, which don't perform as well as the original equipment. Often, the food plant people know they are buying non-OEM parts, but they want to save some money.

"There have been numerous cases where our products, especially positive displacement pumps, were worked on by non-certified, third-party repair houses and they put in parts that did not hold up," says Mike Rivera, regional manager-aftermarket for SPX Process Equipment.

"A customer calls us out on a problem and we trace it back to that repair job and those non-OEM parts. Nine times out of 10, we replace those parts and the problem is solved," he says.

He also warns of replacement parts and/or components on scraped-surface heat exchangers. "Almost all these units are customized for the application, but a third-party repair shop has no knowledge of how the unit was built," Rivera says. "Providing a substandard part or 'less than specification' component can affect the ASME rating - not a good idea."

Metal or alloy substitutions are another insidious counterfeiting tool. Many modern materials require highly complex fabrication in order to ensure performance. In some cases, differences are subtle to the eye but extreme in use. Often packaging, branding, logos and even the specifications provided are identical.

Olimpio Corrêa, a product manager in the Sao Paulo, Brazil, office of Siemens AG (w1.siemens.com), describes such a case in motor contactors. The substitution of cast iron for a silver alloy in motor contactors was well masked by excellent faked packaging. The fake contactors, however, were subject to melting under the heat of conduction with potential for dramatic and dangerous consequences.

Industry is reacting

Most recognized manufacturers of quality parts are taking steps to counter the fakes. Many are successfully seeking legal remedies to defend their trademarks and their reputations, and recent judicial decisions are helping.

The U.S. Customs and Border Protection Agency has a growing program to defend intellectual property rights, under which falls the falsification of branded goods. Statistics on the types, values and origins of goods seized are at www.cbp.gov/xp/cgov/import/commercial_enforcement/ipr/seizure.

Industry associations such as the National Assn. of Manufacturers and the U.S. Chamber of Commerce maintain active committees promoting engagement on these issues and advising members and legislative groups. They've jointly created the Coalition Against Counterfeiting and Piracy.

These are all useful initiatives. The most effective defense, however, is direct action in the field. End users of parts and products - you food plant managers -- are the most useful tool in stopping the fakes and in avoiding risk to equipment, as well as to plant workers, food products and consumers.

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