The battle against counterfeits

imken Canada received an ominous phone call in July last year from a constable at the Royal Canadian Mounted Police (RCMP), asking about counterfeit bearings.

It turns out the Canada Border Services Agency (CBSA) had intercepted a full pallet of bearings at Toronto’s Pearson International Airport in a shipment from China.

“They sent some photographs of the cartons and the external packaging, and asked if we could determine if they were counterfeit,” recalled Evan Boere, business development manager at Timken Canada in Mississauga, ON. “Unfortunately to the trained eye – or the reasonably trained eye – the differences can be hard to spot, but the actual cartons looked wrong enough to raise suspicion.”

All Timken products come in black and orange packaging with a hologram for counterfeit protection. Boere noted the packaging on the suspect shipment was missing a hologram and the barcoding was wrong.

“Those were the first indications,” he said. “Constable Gill asked if we could do some analysis – there were enough telltale signs – so we sent the bearings to our manufacturing plant in St. Thomas, ON, that has a lab.”

The bearings conformed to Timken’s standards in terms of dimensions, surface hardness and weight, but because of the scoring marks on the cone raceway, the product was sent to Timken’s metallurgical lab at its Canton, OH, headquarters for further analysis.

Once they cut it open, it was obvious the bearings weren’t genuine. They were through-hardened, not case-hardened, and the materials were wrong, Boere explained.

Imported from China

Tracking down the perpetrator, however, is challenging.

“That gets a little difficult,” he said. “It’s very difficult to determine the manufacturing source, but they came in from China.”

“We have to do it ourselves,” added Daniel Szoch, program manager at Timken in Canton. Szoch heads up the company’s global anti-counterfeiting operations. The authorities in China usually don’t take the lead in these investigations, he explained. The onus is on the manufacturer to track down the guilty party and point the authorities in the right direction. It can be costly and time consuming.

“Users sometimes are unaware of the significant risks associated with using counterfeit bearings,” Szoch said. “If installed, these fake bearings can damage equipment and even cause personal injury.”

This was the second time in the past year Timken has been notified of counterfeit bearings from China.

“We get a phone call from one of our distributors saying they had unknowingly purchased a bearing from a source they thought was trustworthy,” Boere said. The source was a surplus house.

“We spoke to the principle at the surplus house and he was very good at telling us where he sourced them in China. We tried tracking them down but we weren’t successful,” he added.

“The products were marked as ‘made in the USA’ but they came from China at a really fantastic lead price. It’s interesting with surplus houses because they deal with stuff that comes from all over the world, so I think they tend to turn a blind eye as to whether the product could be counterfeit if the packaging looks close.”

Improving detection

The World Bearing Association has embarked on a mission to educate customs officials around the world about ways to spot counterfeit bearings. In fact, the organization was formed specifically to tackle the problem and has launched a Stop Fake Bearings campaign.

These counterfeits don’t just have an impact on the company’s bottom line; the shoddy performance of these fakes in markets such as automotive can cost people their lives, according to the association.

Boere has conducted education sessions for border officers in Canada. Yet, officials don’t have time to thoroughly check every shipment and even then, fakes would still slip through the cracks, he said.

Scott Lynch, president of the American Bearing Manufacturers Association (ABMA), says Chinese officials have seized 2.2 million bearing products since 2009, and a customs seizure in Long Beach, CA, in 2009 unearthed US$750,000 worth of fakes mimicking four different brands.

Szoch says Timken works with customs officials in each region to determine the flow of their products in and out of the country. “They’ve been more than forthcoming in sharing that kind of information,” he noted.

All bearing manufacturers have been victimized, with the top-selling products being copied most often, he added.

Timken plans to improve detection rates by adding an extra layer of security to its packaging. The hologram will include a QR code; the customer can scan the box to determine authenticity.

When asked if Timken is concerned they could be targets of packaging theft, Szoch said the company pays close attention to any scenario where it could happen, but it isn’t likely. The company doesn’t reuse any of its packaging and customers in the OEM supply chain purchase directly from the company, Szoch explained.

“This phenomenon has more of an impact on our aftermarket industrial distribution business,” he noted. All buyers can do is make sure they purchase from authorized distributors and notify the manufacturer directly if they suspect a product is counterfeit.

In that regard, some stakeholders are urging the government to keep counterfeit parts out of the supply chain.

“We understand there are customs measures that exist in other countries that are reasonably effective in detecting counterfeit shipments,” said Ingalill Ostman, senior vice-president, group communications and government relations at the SKF Group, based in Gothenburg, Sweden.

“Thankfully, we have no reason to believe that this is a substantial or widespread issue in Canada,” she noted. “That being said, SKF Canada views even the rare instances of counterfeit products that have arisen in this country as serious.”

“SKF believes Canadian law could be strengthened to better protect the borders and market against counterfeit products.”

Ostman isn’t alone. A June 2012 report from the Canadian Intellectual Property Council, called ‘Counterfeiting in the Canadian Market: How do we stop it?’ says Canadian border enforcement needs to be strengthened. It also called for the creation of an intellectual property crime task force.

In March, the federal government enacted the Combating Counterfeit Products Act to help protect the Canadian economy from the health and economic threats presented by counterfeit goods coming into Canada.

The Act provides the CBSA with the authority to take action against the commercial movement of counterfeit goods at the border, and will also include new criminal offences for commercial trademark counterfeiting. It will also allow Canadian businesses to file a request for assistance with the CBSA, in turn, enabling border officers to share information with them regarding suspect shipments.

The Act, which covers only commercial shipments, will bring Canada into compliance with international obligations under the Anti-Counterfeit Trade Agreement (ACTA), signed last year.

Rebecca Reid is a writer and editor with the Business Information Group, the parent organization of Machinery & Equipment MRO. Additional files by Bill Roebuck, editor.