Joel Levitt Headshot
Joel Levitt Headshot
Joel Levitt Headshot
Joel Levitt Headshot
Joel Levitt Headshot

How to address the age-old question on remanufactured parts

Oct. 10, 2018
How to decide whether to repair, replace, rebuild or remanufacture parts, components and entire vehicle systems.

When should you repair, replace, rebuild or remanufacture a part, component or even an entire vehicle system? This is a complicated question. It requires knowledge of costs, usage and a strong stomach to be able to guess the future.

Is there a best strategy universally? Is there a comprehensive approach? The answer to these questions is “yes.” But, there is one caveat: The assumption is that none of the scenarios have an even moderate probability of causing a safety issue. For this discussion, we will assume all choices have the same (very low) chance of introducing a safety issue.

When determining to repair, replace, rebuild or remanufacture, anticipated lifecycle of the unit is a major consideration. Determining the amount of life left on a part or component is an assumption we make about how long the unit will operate, but this is always an educated guess based on a number of factors.

The simplified lifecycle costs include:

  • Parts costs with labor for the lifecycle
  • Ownership costs with capital, licenses and insurance
  • Operating costs such as fuel, fuel tax, etc.
  • Downtime cost, including cost of the loss of the unit
  • Overhead costs, including cost of the building, lighting and heat, computers, etc.
  • Cost of money today, in the future and the value of any savings in today’s dollars

Different scenarios impact decisions

There are several drivers to this decision that are outside simple arithmetic, including vehicle or system efficiency (e.g. hybrids or high-efficiency components), obsolesce (53’ trailers, automated manual or automatic transmissions) and technology trends (GPS and equipment telemetry).

In addition, let’s take a more in-depth look at some other real-world variables that can drive decision-making:

Variable #1: Operating costs

It doesn’t matter if a low-efficiency engine will last another five years when it is 2 mpg less efficient then a new engine.

  • Utilization: 100,000 miles/year           
  • Cost of fuel (2018) $3.20/gallon
  • 4 mpg average ($80,000 for fuel) versus 6 mpg average ($53,333 for fuel) = $26,666      
  • Cost difference per mile (penalty for low efficiency) $0.27/mile

It is important to note this calculation is based on the cost of fuel as a constant. In fact, increases in fuel cost will change the return on investment.

In other words, it costs approximately $0.27/mile more to operate the lower efficiency vehicle.

Variable #2: Productive output, such as cube-miles, for freight carriers

For lifecycle considerations on trailers, when looking at the cost to repair versus replace a shorter trailer, it is important to evaluate other aspects of the business.

Changes to regulations may provide additional opportunities. For freight that is calculated by cubic volume, longer trailers can carry more freight. Consider this calculation, for instance: a 53’ trailer carries nearly 30 percent more cubic volume than a 40’ trailer. However, the costs of operation are similar.

If a fleet grosses $200,000 with a 40’ trailer, they can make $260,000 with a 53’ trailer.

In this instance, repair is out and replace with new technology is the answer. 

Variable #3: A major breakdown

When a major breakdown occurs, fleets have several approaches to get the unit back on the road. Most often fleets will just replace the part with an OE equivalent. But variables may impact how to approach the breakdown, such as a more rigorous evaluation and decision-making process, or considerations such as the unit nearing the end of its lifecycle.

Below are options a fleet may consider when handling a major breakdown:

      >Replace

      Replace the part with an OE equivalent

To confirm and obtain this part, fleets can contact the OEM or local dealer and order the part according to their parts manual and system. This part or component should be the same specifications as the original one removed or an approved replacement by the vehicle manufacturer. OEM spare parts are usually held to be the gold standard for parts. Depending on the circumstance this might be the easiest.

      Replace the part with a third party part

What about a higher mileage unit where other systems on that vehicle might be in a failure trajectory? Another alternative is considering a third-party parts provider. These will-fit parts generally have a bad reputation, but are getting better. As with many vendors, fleets can find reviews to help evaluate less known or unknown parts vendors.

      >Rebuild

      Build a new part in-house  

Many parts, especially simple parts, can be made less expensively than they can be purchased.

If a fleet has the capability to build a spare part, this decision should be primarily an economic one.

      Rebuild the existing part

When the component is less critical, a qualified rebuilt part can be a good solution. To rebuild is to recondition a part by cleaning, inspecting and replacing only worn or broken parts. Serviceable parts are reused if they fit within the manufacturer’s acceptable wear limits. The quality of rebuilt components varies from one rebuilder to another and many come with only a limited warranty.  

      >Remanufacture

Again, how much life does the remanufactured component have left?  An old rule of thumb for remanufacturing of specialized truck bodies was to remanufacture if the cost is less than 50 percent of the cost of new with greater than 75 percent of new life.

Remanufacturing is different from rebuilding. The work is done in a factory and all the components of the part or system are disassembled and thoroughly cleaned.

In addition, during remanufacturing some components of the remanufactured part may be replaced with new. For instance, new parts may include pistons and pins, piston rings, connecting rod bearings, the timing gear and chain, valve and camshaft bearings, pushrods, valve lifters, gaskets and seals, freeze plugs and oil pumps. Additionally, cylinder heads are cleaned and resurfaced, cylinders are bored and valve seats are resurfaced. Then they are tested, repaired, reworked or replaced.

When all this is finished, the engine is reassembled and tested, using state-of-the-art computerized equipment.

With remanufacturing, the engine must meet certain performance requirements during oil pressure, compression and vacuum testing.

Conclusion

Overall, there are a number of considerations to evaluate when it comes to parts, system or full unit replacements. Be sure to take into account all variables and complete all of the necessary research in order to make sure the best decision can be made. 

Joel Levitt has trained more than 17,000 maintenance leaders from more than 3,000 organizations in 35 countries. He is the president of Springfield Resources, a management consulting firm that services a variety of clients on a wide range of maintenance issues www.maintenancetraining.comHe is also the designer of Laser-Focused Training, a flexible training program that provides specific targeted training on your schedule, online to one to 250 people in maintenance management, asset management and reliability.