The Core Issue with REMAN
Learn about how DieselCore, and their solution to the core issue with Reman.
Episode 234: The main issue with remanufacturing, the core issue, has always been the cores. If you’re a manufacturer, you need cores. If you sell parts, you need to do something with the cores. To combat this problem, DieselCore has come up with a solution.
My guest today is Justin Greenberg the President & CEO of DieselCore. Justin has been in the automotive parts and service industry for 22+ years, and currently holds a Board of Directors position in MERA. He is widely considered the foremost authority on interpreting core trends and creating opportunities through market inefficiencies.
Guest Website: DieselCore.com.
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Transcript of Episode:
You’re listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine, and this is the show where you get expert advice about heavy-duty parts that keep trucks and trailers on the road longer while lowering cost-per-mile.
As many of you who have listened to the podcast know, I started my career in remanufacturing. Now, the main issue with remanufacturing, the core issue is always the cores. If you’re a remanufacturer, you need cores. If you sell parts and you don’t remanufacture, you need to do something with the cores.
So I’m very excited to talk to our guests today because they have created a really unique solution to a significant challenge in the industry, and I’m looking forward to talking to them about it. My guest today is Justin Greenberg.
Now he’s the President and CEO of DieselCore. Justin has been in the automotive parts and service industry now for 22 plus years, and he currently holds a board of directors position in MERA. He is widely considered the foremost authority on interpreting core trends and creating opportunities through market inefficiencies. My type of guy, looking forward to talking to Justin. Justin, welcome to The Heavy-Duty Parts Report. So glad to have you here.
Thanks a lot, Jamie. It’s great to be here with you today.
So it sounds like you and I have, uh, have been circling in similar, you know, circles, whether it be remanufacturing or 20 plus years in the business. It’s a fabulous industry to be a part of. You know, you’ve been both involved in automotive and heavy-duty. What do you think is the big trends right now in 2022 that are affecting remanufacturing and cores in the industry?
Well, I mean, all of us have been affected in some way, shape or form by this supply chain issue that has cropped up for everybody. And it’s obviously not just our industry, it’s many other industries, but it’s certainly acute for us because we’re all feeling it.
One of the things that we have found is that you know, remanufacturing has always been a very, very important part of the industry, but historically, over, over the last two years, it has just really come kind of into the limelight because we now have product that companies and large OEs aren’t able to procure brand new anymore. Or it takes too long to get it, or maybe it’s too expensive to get it. And so now they’re looking for other solutions.
And so I think one of the big things we’re seeing right now in the remanufacturing sector is some of the large OE or aftermarket companies looking into reman of other types of injectors or turbos or maybe even some other parts that aren’t normal units to be remanufactured. And so because of that, the core market has exploded on some of this material.
That makes a lot of sense to me. I would also assume that there are end user customers who maybe at one time would’ve said, No, I don’t want reman, but now they’re like, my truck’s down, that thing has to go, so get me the part that you can get me. So I think this is probably like a moment in time for the reman sector where we really can move the reman sector forward in the minds of both the manufacturers and resellers as well as the end user customers.
I couldn’t agree with you more, Jamie. I mean, we’re seeing it more now than we ever have. We’re seeing a lot more messaging and activities surrounding remanufactured parts. I mean a great example is one that you just listed. You’re not able to get a part that’s brand new because it’s not available, or it has gone into, you know, some, some sort of status that, that it can’t be procured anymore.
And now all of a sudden the only option is a remanufactured part. And you know, you and I probably both know that a remanufactured part and many times is equal, if not better than a brand new part because as they remanufacture it, they’re able to go in and kind of remedy some of the issues that might have caused a failure in the first place. So in my opinion, it’s the way to go for sure.
There’s a concern though, that I have right away, cuz I agree with you. If you’re truly remanufacturing, you have the benefit of seeing hundreds if not thousands of units after they’ve been in service. And so you can identify those failure points, you can upgrade that part and make it better than when it was brand new off, you know, from the OEM. Of course, the OEMs, the engineers, they don’t have the benefit of seeing, you know, all of that cycle duty time and and whatnot.
The thing that I worry about though is while remanufacturing can do very well right now, there’s also probably the risk of people just kind of cleaning up parts and trying to position them in the market as if they were truly remanufactured. That’s gotta be a bit of a concern for you as well.
It definitely is. Yep. And you know, we’re on the supply chain side of that, but, yeah, I mean it is certainly an issue all over. Somebody marketing apart as remanufacture versus something that might have not gone through all the processes and procedures of, you know, a normal part that might be involved in some sort of industrialized process to remanufacture it.
So yeah, I mean, one of the things that I always tell people to look for is, you know, go to one of the large tier one or tiered aftermarket companies, make sure you have a great relationship with your distributor or market part supplier as long, you know, as well as your original equipment part supplier. And those are gonna help make sure that you get a high quality remanufacture part.
Yeah, and to your point, the relationships that we are either we’ve had historically or even the new ones we’re forging right now because of supply chain issues, they’re so critical to making sure that you know, they’re gonna stand behind what they sell you. So not only do you have who remanufactured it, but you also have who’s selling it to you. And both of those organizations are standing behind this product.
So that, that’s a critical piece to the puzzle. From your perspective, just looking at it from the remanufacturing, point of view, have you seen quite a large increase in people willing to forge new relationships because they’re trying to cope with the supply chain?
Yes. We’ve certainly seen that and I’m sure that that a lot of the aftermarket distribution channels as well as, you know, some of the OEs even have seen it as well. Again, mentioning earlier a truck is down, you have no other solution except to go out and buy a part that you can source because maybe that part’s not available somewhere else. And so that might include creating relationship with a new supplier somewhere, which in my opinion is a great thing to do. I feel like you can never have too many wonderful partners that you can work with.
Yeah, that expanded supplier network is so important. And let’s be honest, we’re very partial. Hopefully it’s with a bunch of remanufacturing companies that’ll be able to really help you. What do you think companies should do to retain those relationships after the increase in demand starts to wane once supply chains do catch up?
Yeah, so I believe that the companies, I’m sure that they’re gonna go after a lot of these customers and continue to service them, but hopefully they’re gonna find ways to service them that are outside of that one or two parts that they were able to solve a specific problem with. Maybe that includes some maintenance parts, uh, maybe that includes, uh, some type of service. So yeah, hopefully the relationships are long lasting. It’s not just gonna be a single purchase type of relationship where you only buy one part and then, and then that’s it.
Yeah, and a great example of that. I know when I was working for a remanufacturer, we had a repair and return service. So if there was a, a core that was hard to get your hands on or the person wanted the same part back, we offered that as a service. That was definitely a value add. You know, speaking of cores, that’s the core issue that we’re here talking about is how do we get access to those cores? If we have a surplus of those cores, what do we do with them? That’s what we’re here to talk about. We’re gonna continue that conversation when we get back from our break.
We’re back from our break and before the break, we were talking about some of the trends in the industry and how it’s impacting remanufacturing. Justin, I’m so happy to have you with us. You’re the president and CEO of DieselCore. Can you start off just by telling me, what is DieselCore the company, what does it do and where did the idea come from?
Well, the idea came from, you know, many years in the dealership business, mostly automotive related on my side, but I spent about 15 years in the dealership business and during the great recession, which was, gosh, quite a while and now ago, but I found myself in probably a situation that many other people had found themselves in at that point, which was, I was out of a job.
And something that I had always gotten used to doing was buying and selling used vehicles just kind of on the side as a hobby. And one day I purchased a Dodge Ram pickup truck that needed a new engine. And when I went to go source that engine, the person that I sourced it from, which was a salvage yard asked for the core back.
And obviously one thing led to another, I thought, my gosh, why would anybody want this old engine and what are they gonna do with it? And come to find out, there was an entire industry that I had no idea existed, which is of course the remanufacturing industry.
Isn’t that, that’s such a problem, right? The remanufacturing industry is just invisible to so many people.
I would agree. I would agree. And it’s unfortunate because not only is it doing some some wonderful things to help solve supply chain issues, but it’s also doing some great things for the earth. We’re keeping all these, all these parts out of the landfills. We’re keeping ’em out of, you know, recycling centers and giving ’em all second, third, or fourth lives.
Okay. So you, you’ve got this truck now, you’ve just put in the, the engine and you sent the core back. How do you go from that to president and CEO of DieselCore?
So I actually, I didn’t send the core back. I decided to keep the core and dismantle the engine and, uh, start finding homes for all the pieces and parts on the engine. And again, I discovered there was a remanufacturing sector, so companies that wanted to remanufacture cylinder heads or injectors or turbo chargers or fuel pumps or ECMs and so on and so forth.
And so I ended up going out and creating some relationships with some wonderful customers, many of whom are still just, just our best customers that we have today and, uh, forging lifelong relationships. And we decided to start growing. And so that was about 12 years ago. I started the company in 2010. And we now have a couple of different locations and we are just growing like crazy.
So a lot of remanufacturing companies calling us specifically because we’re able to help ’em out of, uh, some, uh, hard to, hard to find, uh, core we’re, we’re able to source hard to find core for them. And we’re also set up to solve some large scale problems for some of the largest OE manufacturers.
I swear some of the best companies always come in the wake of a bear market. It’s just like, it’s just, you know, I don’t know if it’s just because it throws us into that position where we have to, like I started my contracting business in 2009, same thing as you. I saw the writing on the wall four months after I resigned my position.
They shut down every corporate store that of the company I work for. And so I would’ve been laid off anyway. And that, that business we sold in 2016, and, you know, a bunch of my friends, they’ve all started businesses during recessions and bear markets. So I think sometimes it’s just the necessity of the circumstance forces people to think outside the box.
That’s right. Necessity is the mother invention. So, yeah, that’s exactly right. I knew that I wanted to go out and try something on my own. I wasn’t quite sure what it was gonna be, but I’d really just kind of fell in love with this remanufacturing sector. The core market, you know, is very specific in that regard. It’s not like your normal supply chain.
You can’t call up and order a bunch of injectors unless they’re out there. You know, normally if you’re producing brand new parts, you can call up and say, hey, I need roles of steel or roll of aluminum, or whatever it is. But when it comes to remanufacturing the core has to be available to remanufacture.
Yeah. They only made so many that year. So, you know, some of them have been damaged, some of them have been taken outta service and there’s only so many in circulation. So like, who’s your ideal customer and what’s the big problem that you’re solving specifically for them? I think people understand now it has to do with cores, but walk us through that.
Sure. So ideal customers are gonna be large original equipment remanufacturers. So obviously we can all, you know, think of some, some large names out there, Cummins and Caterpillar and Bosch. And these are all really large original equipment manufacturers.
Some of those guys we work with, some of who we don’t. And then also we have a large number of aftermarket clients, tier one, tier two, tier three aftermarket clients that are in the remanufacturing sector as well. And we’re normally solving problems for them that are specifically related to shortages on core. Now, those core shortages could be because they already have a remanufacturing program going and maybe there’s a certain percentage of fallout or there could be some sort of new program they’re trying to launch and they need to go out and buy a very large number of injectors or turbos or ECMs or cylinder heads or whatever it is.
And they’re gonna come to somebody like us and they’re gonna say, hey we wanna put a program together. And for us, we really take the approach of planning. We like to sit down with our clients, really understand what the goal is that they’re trying to achieve, and then we come up with a plan together of how we can achieve it.
Yeah, I think that’s so important. So one of the sponsors of our show is AMBAC International. They are a fantastic company that remanufacture fuel injection, this by the look of your face, I think, you know who, who they are.
We absolutely do. Yeah. AMBAC is a great company. We know several of the folks over there very well, Robert Isherwood and some of their different operations folks. And so it is a great company.
Yeah, you don’t exist for over a hundred years if you haven’t figured some things out and do some things
Right’s. Exactly Right.
So let me ask you something like, I’m always interested in the economic impact. So if you’re a company, and even let’s say you’re a tier two manufacturer, you’re not a big OE, but you’re, you’re independent, you’re remanufacturing compressors and fan clutches, maybe you’re doing fuel injection like AMBAC does. What’s the economic economic impact if you run outta cores?
Well, I mean, generally speaking, if you run outta cores, that means that you’re no longer able to remanufacture a product. Your only other choice is to either do some sort of an out of stock scenario or you can go and try to source new and then infill. But generally speaking, I would imagine you still have orders going on. So the big thing is you don’t wanna run outta core.
If you’re a remanufacturing company and you run outta core then somebody’s truck ends up being down, whether it’s a commercial vehicle or whether it’s a pickup truck. And that’s obviously a bad scenario. Those back orders can begin to stack up pretty quickly.
So yeah, I mean, ideally you want proper core management that’s gonna allow you to make sure that you aren’t running out of core. Generally speaking, you wanna be ordering that core several months ahead of time or at a minimum 30 to 60 days ahead of time. If you’re in a hand to mouth scenario, then that’s gonna, that can get really difficult, especially if something is in short supply.
Yeah. And not like with regular manufacturing something new. I mean, you have to get the raw materials in, but with the remanufacturing process, you have the added time and labor to tear down, clean, prep, make replacement parts, you know, from new to bring this thing back to OE or above standards.
So there’s additional time there that needs to be accounted for in the manufacturing process when you do reman. So you guys have done some really interesting things. You have a reverse eCommerce site. Tell me about that, because that was fascinating to learn about.
Yeah, thanks Jamie. It is a pretty, pretty interesting concept. So early on when we were buying core from either salvage yards or scrap facilities or even the general public, uh, you know, shop owners, things like that, we quickly realized that we spent a fair amount of time either on the phone as a company or exchanging emails with, with people that only wanted to sell a handful of parts. Maybe it was two injectors or six injectors and one turbo charger, whatever the case may be.
And we would also spend a similar amount of time on the phone with somebody that we were buying a hundred or 200 parts from. And so we wanted to create a site where, you know, whether you’re a shop owner or an individual or even another company, you could log in, understand and see what we’re paying for that particular part at any given time, and then create a purchase order with us to where you can actually sell us the material.
So the reason we call it reverse eCommerce is it’s the opposite of buying something. Normally if you were to log onto an Amazon or a Target or somewhere and try to buy, you know, buy something, you have a shopping cart that you would put that item in and then you would check out, well we have the same thing, except instead of putting the item in to a shopping cart to check out and pay for it, you’re actually gonna put it in and you’re gonna sell it to us.
And so there is a way that you can upload tracking numbers and you can ship it over to us and then once we receive it and check it in, we will pay you, uh, for that, that particular product. And as you would imagine you know, there’s obviously multiple different grades of material. If something’s damaged, we may have to take a harder look at it, and then normally, uh, you would get a phone call, uh, and we could, we could discuss it.
But there’s a ton of different parts on the website, Jamie, everything from injectors and turbo chargers to, you mentioned fan clutches earlier, even complete engines. So we buy a myriad of different materials.
Yeah. And my favorite air compressors, we used to work with Superior Industrial Friction in Alberta and they remanufactured all of our compressors for us. Justin, what is something that gets remanufactured that might be a little surprising to the average listener? They wouldn’t be something that they would think actually gets remand?
That’s a good question, Jamie. Some of the things that are surprising to me that get remanufactured are some of the small little valves and solenoids that come either fuel related or, you know, EGR related, exhaust gas recirculation related. Also EGR coolers get remanufactured.
So normally all of us think of like a turbo charger or an engine or a transmission. Those are items that get remanufactured, but some of the small, itty bitty pieces that are on the engine that are outside of the normal electronic or mechanical components. The other thing that gets remanufactured on a regular basis is brake shoes. So that one’s, that was a really big surprise to me.
I’ve done thousands of brake shoes myself.
Have you? Okay. So, you know, so that’s, yeah, I mean they actually drill out the rivets pull off the linings and they use, you know, they’re able to refinish and reuse the backing plates and I mean, it’s one of the most remanufactured items out there because if we think about it, how often are brake shoes, you know, getting worn out, especially on some of our large commercial vehicles.
So yeah, it’s another fun item that we buy a lot of. And that one to me was a big surprise whenever we first got into it was brake shoes. Normally I thought that was a throwaway item, but it’s definitely not. Brake shoes are in high demand.
You’ve been listening to The Heavy-Duty Parts Report. I’m your host Jamie Irvine, and we’ve been speaking with Justin Greenberg, the President and CEO of DieselCore. We want you to support remanufacturing, buy high quality remanufactured parts and don’t you dare throw away those cores.
Head over to dieselcore.com to be able to sell those cores to DieselCore so that they can keep them in the remanufacturing sector. And we can see those parts back in service very, very soon. Justin, thank you so much for being on The Heavy-Duty Parts report. It was awesome having you with us today. Really appreciate it.
Yeah, thanks a lot Jamie. It’s been a pleasure and I can’t wait to continue discussions. I’m always willing to talk about remanufacturing and core.