Newsmaker: Richard Alameddine
How have trends in the undercar category affected the way Tenneco goes to market?
We listen to the market very closely, so our business strategies are well aligned with the needs of the installer. For example, when shop owners told us they wanted to focus on capturing larger shares of the foreign nameplate market, we leveraged our global manufacturing footprint to introduce an application-engineered ride control line for all makes and models. To help energize what some saw as a challenging strut replacement category, we revolutionized the repair with our timesaving Monroe Quick-Strut assembly. We also saw a need for more effective technical training in the ride control category. This led to the launch of our Tenneco Technology Tour and Monroe Ride and Drive experience, which trained more than 7,000 technicians last year and will exceed that number in 2008. And to address the frustrations of shop owners regarding the confusing array of aftermarket brake products, we entered the friction category with a line of OE-inspired pads and shoes that simplify the choice and speed the repair.
What types of strategies are in place to counteract the changes in maintenance intervals along with longer lasting products?
There are two very different scenarios represented in our ride control and exhaust businesses. In ride control, the primary challenge has been the consumer's lack of understanding that shocks and struts wear out and need to be inspected and replaced on a periodic basis. We've communicated this message through support of the Motorist Assurance Program's 50,000 mile replacement recommendation and our "Safety Triangle" consumer awareness initiative. In addition, millions of consumers have seen or heard our broadcast commercials, and millions more have seen our ride control billboards along North American highways. We also support the shop owner who is looking for ways to implement more effective ride control inspection programs. And we’re providing shops with an ever-growing range of training and point-of-sale materials to help drive sales and strengthen customer relationships.
At the other end of the spectrum, in exhaust and emissions control, there's an entirely different challenge: OE systems are lasting longer. It's important for companies like Tenneco to demonstrate our commitment to this category by offering the OE-quality components consumers prefer, as well as the extensive, all makes/all models coverage shops rely on to capture every service opportunity. But there's also a positive side to the exhaust market, thanks to government emissions requirements. These increasingly strict standards have driven the growth and value of the Walker catalytic converter business. We are aggressively expanding our domestic and import coverage and accelerating our rollout of new part numbers. We're introducing more new parts, and we're doing it earlier than ever to help our customers capture new sales.
How important are visual merchandising aids in selling a product that can't be seen on the car, like shocks and struts?
Those types of tools have a significant impact not only on the sale at hand, but also on the shop's relationship with the vehicle owner. Instead of telling the customer that he or she needs new shocks or struts, or that their catalytic converter has failed, you can take the time to show them what the part is, what function it performs and how and why it wears out. This can make all the difference in the world to the customer, who will come away from the transaction feeling like he or she has made a smart purchase. Over the years, Tenneco has developed an extensive array of merchandising tools, ranging from waiting-room posters to flip charts to functional displays that demonstrate the differences between new and worn ride control parts. Our shop customers absolutely love them and use them on a daily basis.
Are there any areas of the country or any demographic of driver that create more extreme environments for your products, and thus, shorter change intervals for technicians?
Today's vehicles and drivers' more aggressive, stop-and-go driving styles make the selection of the right shocks, struts and brakes more important than ever. But there are aggressive drivers and challenging road surfaces in every market, so ride control and friction replacement is less a function of region. On the exhaust side, we do see higher incidences of replacement in colder climates, where road salt and other corrosive elements can shorten the service life of mufflers and pipes.
Price continues to be a contentious issue in the aftermarket. What strategies does Tenneco employ to overcome the pricing "race to the bottom?" To accommodate a price-conscious marketplace, are any of your company's value-added services compromised?
Our Monroe and Walker brands have become the clear category leaders by delivering innovative, high-quality products that fit and perform like OE the first time, every time. That's far more valuable to the shop owner and consumer than the lowest possible price.
Has the Monroe brake line yielded the types of returns expected by the company? Why or why not? Are there any plans in the pipeline for future expansions?
The brakes program continues to exceed our expectations. As to why, I'll just pass along the feedback we've received from shop owners, who love having OE-inspired, application-specific products that come complete with everything you need to finish the job. They've also told us they're avoiding the comebacks and lost customers caused by noise and vibration issues associated with some other aftermarket products.
As far as product line expansions go, we've continued to listen to the market. Customers told us they'd like to have a broad line of new-steel brake shoes, and we've delivered. They wanted us to continue to expand our coverage of semi-metallic and ceramic pads, and we've done that as well. In fact, we offer market-leading coverage of vehicles that are five years old and newer.
What kind of sales opportunities does the Monroe brake line open up (i.e., selling shocks with a brake job)?
Well, a ride control inspection should be part of every brake job, regardless of whose brake pads you're selling. The biggest opportunity for Monroe installers has been their ability to reduce the time needed to complete a quality brake repair — a repair that won't result in a comeback. Because we, in most cases, offer everything the technician needs for the job right there in the box, they don't have to search for hardware, noise elimination clips, lube or even wire wear sensors. And the Monroe brand itself is another important part of the value of our brakes offering — shop owners know that millions of consumers respect the Monroe name.
In your opinion, what are the three top burning issues/threats that the industry has to overcome? And how do you think those challenges can be met?
Attracting, training and retaining qualified technicians and shop owners will be our No. 1 challenge for many years to come. Many organizations, including ours, have worked hard to convince young adults that a career in the vehicle service industry can be both professionally and financially rewarding. But all of us need to do even more. It's an absolutely critical issue because even the best repair technologies and most extensive distribution channel can't survive without talented frontline professionals.
We're also challenged by the increasing diversification of vehicle nameplates and models. Tenneco has done an excellent job of leveraging its presence in other parts of the world to ensure that we have the right products for all vehicles in the North American market. We'll continue to build on this strength to help provide our customers with a competitive edge over dealership service operations.
A third threat is the consumer's demand for faster, more convenient repairs. We're all more conscious of the time constraints in our lives, but consumers today simply can't afford to park their vehicles at a service shop for a day or more. They expect the same high-quality parts and services, of course, but they want their repairs to be completed in a more timely fashion. Part of the answer lies in making sure we have enough technicians and shops to handle the demand. Another solution can come through innovative products that help ensure a quality job but at a fraction of the time previously required. Our Monroe Quick-Strut is an excellent example of a product that has redefined the repair experience, both for the shop and the consumer. This type of solution — which results in increased job quality and stronger customer satisfaction — is exactly what Tenneco is all about. And that’s why we're so positive about our business, and this industry, over the long-haul.
What are the major changes we'll see in the aftermarket in the next five years in Tenneco's categories of expertise? What about for the aftermarket at large?
We're already starting to see vehicles with electronic suspensions and stability control systems entering the aftermarket. This trend will certainly accelerate, and Tenneco will play an ever-larger role in providing replacement parts for these applications, since we're the OE supplier of many of these systems.
The emissions control market will enter a new phase of strong growth as a result of the latest clean air mandates. The use of diesel particulate filters and catalytic converters on light, medium and heavy trucks will eventually drive new sales opportunities in the aftermarket. We see significant upside to the emissions control category over the next several years.
