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  •   »  It’s Often True… But Not Always True

It’s Often True… But Not Always True

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Steve Weedon 21 October, 2018 at 3:49 am

Steve is an award winning CEO who has held senior management positions at various OEMs as well as Katun Corp and SCC. He was the original founder of The Recycler Magazine and of trade shows in Europe. He also established Static Control's Worldwide Subsidiaries and relocated to the US to become Executive Vice President.

We keep talking in these pages about the change that is taking place in the industry. Since 2015 the pace of change has been faster than our ability to keep up with the news. HP just decided to buy the UK firm, Apogee. Xerox has a whole new direction led by its major shareholders who have now taken control of the iconic company. Staples has new owners in the US. Where have all the remanufacturers gone? Trumps tariffs don’t seem to have had much affect so far. And Clover’s white paper tells us more about the company’s worries and concerns than it does about the paradigm shift from remanufactured products to new-built, patent-safe products.

Parts and supplies vendors for ink, laser and copier remanufacturing are having a tough time. Prices have reached an all-time low, volumes are reduced and vendors are going out of business. It was a shame to see OCP GmbH file for bankruptcy in Germany recently. The fate of this highly regarded ink development innovator with good quality products and prior art, is symptomatic of a changing market place.

0 Acquisition interest is high for buyers looking for ways to expand or improve manufactured products, particularly from China, where costs of manufacturing are going up. Interest is also high from sellers looking for exit or survival strategies, who find the volumes dwindling as local prices collapse and orders head south.

It is not because the overall volume of demand for consumable products is going down. In fact the opposite is true: globally, it’s going up. But, there is a seismic shift away from remanufacturing and remanufactured products towards new built cartridges. Most new built cartridges come from China, which is where the volume is. It’s interesting to note Russia is now also getting in on the act. It is true, most new built cartridges that are exported from China are sold to areas where the OEMs, for their own reasons, have not registered patents. This makes these cartridges legitimate products.

It is also true some players import these same cartridges into Europe and North America, amongst other places, where the OEMs, of course, have registered their patents. Many, if not most of these products could be infringing those patents. So buyer, beware.

It is not true however that all new built products from China are copy cat “clones”, are patent infringing and are hugely risky. This is a total misconception created by the few. Why? They simply have no answer to the competition that such legitimate, new built cartridges create. They are non-infringing, consistent in quality, and contain no core- empty cartridge price in the bill of materials (BOM). This change has been taking place in our industry since 2015 and has not been good for those who did not see it coming.

The truth is the Aftermarket will significantly grow its market share, way beyond the 20-25% it claims now on the foundation of legitimate, new built, cartridge products. That worries the OEMs and it worries those companies fixated on, and “stuck” with a remanufactured products only business model.

Let’s not kid ourselves. All end users buy an Aftermarket, remanufactured cartridge because it is cheaper. That same end user comes back if the quality was good. All the merits of recycling for reuse and eco friendliness do not enter the equation now. They may have done back in the early 90s. Now remanufactured cartridges have to compete with new build, patent safe, cheaper, better quality products. The truth is they fight a losing battle.

This is the big problem for parts and supplies distributors and vendors alike, who traditionally have supported, trained and serviced cartridge remanufactures around the world for the last 30 years.