This blog was formed primarily to expose what this author believes to be a false story that two of the worlds largest bearing manufacturers conspired to release as a news story in order to use it in marketing campaigns. Since that first project ended with neither company willing to release any information that could authenticate their story, we moved on to looking at all bearing counterfeiting and how it is reported.

Thursday, March 5, 2009

Fake Stories as a Marketing Strategy

Schaeffler Group (who manufactures INA and FAG) and SKF made a joint press release in 2007 concerning allegedly “fake” bearings. It appears that the press release, itself, is a fake. They called a press conference at the FAG premises in Schweinfurt to “draw attention to the fact that brand and product piracy is far from being restricted to China or southeast Europe. It takes place right on our doorstep”. This is according to Hans-Jurgen Goslar, Member of the Schaeffler KG Managing Board.

At this press conference they used blowtorches and angle grinders to “render useless” 40 tons of allegedly counterfeit bearings. These bearings were supposedly manufactured in Germany. Apparently the entire 40 tons of supposedly counterfeit bearings came from one “independent rolling bearing dealer in Franconia” (whom they fail to name).  A brochure from Schaeffler regarding this event is titled Product Piracy - Made in Germany.

There are a number of things missing from the brochure that one would expect to be included in any legitimate news story: the identities of both the bearing dealer and the “criminal investigators”, the charges and even the town were the raid took place (Franconia is a region in Germany not a town).  I can think of only one reason why these companies would be unwilling to release the name of the bearing dealer or even the town in which the raid took place: this type of information would make it possible to either authenticate the story or to prove it false.

From the pictures it appears that there is a very wide variety of sizes with just small quantities of each size. This is not what one would expect to find from a counterfeiter.  Counterfeiters deal in items they can move easily.  There are not a lot of counterfeit thousand dollar bills.

Some of the bearings in the pictures were rusty, an indication that they were quite old.  It is common for manufacturers to scrap inventory that has exceeded the recommended shelf life. It is much more likely that the bearings in the pictures are legitimately trademarked product that were scheduled to be scrapped. This is because a conglomeration of odd sizes that didn't sell in the allotted time is exactly what you would expect to find in that case.

The story gives no evidence that any of the bearings were manufactured in Germany.

I sent an email with six questions to Matthias Schweizer at Schaeffler who is said to be responsible for the brochure.  I received the following answers from Schaeffler lawyer Ingrid Bichelmeir-Boehn:

What was the name of the “independent rolling bearing dealer in Franconia”?
Because of legal reasons we are not allowed to tell you the name of the dealer.
Were all 40 tons from this one dealer?
Yes, it was the whole FAG, INA, Elges and SKF stock of this dealer.
Were any charges brought against this dealer?
The criminal case isn't finished yet. The civil proceedings are finished. All of the dealer's bearings have been destroyed.
Is there any evidence that the bearings were manufactured in Germany?
The stock was mixed. We identified bearings, which were remanufactured in Germany and packed in faked boxes.
Do INA, FAG and SKF know where the bearings were manufactured? If so, have they taken action against the manufacturer?
We know some production sites of faked bearings. We take legal actions against every manufacturer we get to know. These procedures last long and therefore it isn't possible to give you more information yet.
Is there a list of the quantities and sizes of these 40 tons of bearings? If there is, is it available for review?
Yes, we have a list for our internal purposes. It isn't available for review.

If you need further information please do not hesitate to contact me.
Mit freundlichen Grüßen / Best regards
Ingrid Bichelmeir-Boehn

The answers that Schaeffler gave me confirmed that my suspicions. Schaeffler is totally unwilling to release any information that would authenticate this very questionable story. Why?  “Because of legal reasons we are not allowed to tell you the name of the dealer”.  If there is a law that would not allow them to tell me, can’t I at least be told what the law is? I don’t believe that such a law exists, but I would check it out given the opportunity.  “If you need further information please do not hesitate to contact me.”  She should have said, “If you need further information, forget it”, because she refused to answer my subsequent emails.

In those emails I asked why they would destroy the evidence before the criminal trial took place. I asked whether a secret tribunal carried out the civil proceeding. About two years later I asked whether the criminal case had finished yet. No answer.

I did find out that Ingrid Bichelmeir –Boehn admits in an email sent October 2,2007 to Ian MacPherson of Bearing Industry Code of Conduct:
“As you assume we destroyed some very old bearings from this dealer, too. We found out that these bearings would be poorly refurbished parts also counterfeit because the dimensions and the quality as well as the lubricant won’t meet our standard and customers will be misled.”

Yes, customers are being misled! I believe I am one of them.  No mention is made in the press release that some (or possibly all) of the bearings were made by SKF and Schaeffler and were actually trademarked at the factory. She is calling “very old” bearings counterfeit because they “would be poorly refurbished”.
She does not claim they had been refurbished. She claims, “We found out that these bearings WOULD be poorly refurbished.”

I would point out that refurbishing a bearing that has a trademark legally applied is not the same thing as manufacturing a bearing and illegally applying a trademark to it. The latter is counterfeiting. The former would only be illegal (at least in the USA), if an attempt was made to represent it as new.

This press conference/brochure is very misleading at best and more likely a willful attempt to deceive the public.  The motivation these major manufacturers have for concocting stories about counterfeit product being widespread really has nothing to do with counterfeit product at all.  The real concern of these manufacturers is "gray market" and surplus product. Gray market product is by definition legitimately trademarked product.

In an article published in Purchasing Magazine (7-17-2008), Bob Summerlin, executive vice president of sales and marketing for Motion Industries in Birmingham, Ala., the largest authorized distributor for SKF and other manufacturers, says, “While we have heard the reports, we are not aware of any customers receiving counterfeit product.”

The point of these stories is to create concern in the mind of the customer by wildly exaggerating the amount of counterfeiting that goes on.

It came out in SKF's USITC action that their largest authorized distributors were also the largest customers of both the surplus and gray market sellers. It also came out that even SKF USA purchased gray market product.  It is clear that if there were these massive amounts of counterfeit bearings in the marketplace, buying only from authorized distributors would not eliminate the possibility of receiving them.

With Schaeffler’s admission that some (I’m guessing all) of the bearings were, in fact, over-aged bearings rather than counterfeit, the story is not as they first tried to present it.

So now the story is that they confiscated (at least some, maybe most or all) legitimately trademarked bearings from an unknown bearing dealer with the help of unknown “criminal investigators” based on what they (SKF, Schaeffler and the investigators) knew he was going to do (but hadn’t done yet) with the bearings and then secret proceedings were carried out in some unknown location in which this unnamed bearing dealer was found guilty (maybe?), but none of this made the papers anywhere, except for what was released at their press conference.

Maybe it’s just me, but something sounds mighty fishy. This story cannot pass the smell test. Something is rotten in Denmark. Or should I say Sweden and Germany?

The real story here.

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