For On The Floor: Counterfeit Parts — A Scourge Seen and Unseen

By Rick Carter, Executive Editor

As sources in government, private industry and elsewhere report, the influx of counterfeit parts into manufacturing systems is a serious problem that appears to know no bounds. MT “Uptime” columnist Bob Williamson likens their non-stop arrival to a “tsunami,” the monetary impact of which is estimated to be in the multiple billions of dollars annually. The amount reflects not only the lost sales of parts the counterfeits copy, but the cost of malfunctions related to or caused by counterfeits and the cost of counterfeit-related events, such as product recalls and product replacement. Counterfeit hot spots are electrical, electronics, military applications, aerospace and automotive, but it’s widely believed they can pop up just about anywhere.

Despite rigorous anti-counterfeit strategies proposed by some of the harder-hit industries, counterfeits remain difficult to spot. Their makers, in fact, excel at generating parts that are nearly indistinguishable from the real thing in every way except functionality. Most of our Reader Panelists say they know about the counterfeit problem, but have not seen any counterfeits themselves. To which an expert might respond, “How can you be sure?” At least one Panelist reports having faced fakes, so his perspective is placed first in the responses below. But we include perspectives from the others as well in this month’s review to help define a shape-shifting industrial scenario we can be reasonably sure is taking place but cannot always see.

Q: What is your experience with counterfeit parts? If you have encountered them, what types of parts are/were they?

“Bearings, mechanical seals, various rigging hardware and at times even drive belts.”

… Maintenance Coordinator, Mid-Atlantic

“I am aware of the issues surrounding counterfeit parts although we have not been affected by them, other than getting notices from suppliers that know their products have been counterfeited.”

… Maintenance & Facilities Team Coordinator, New England

“I have had no personal experience with counterfeiting of parts. But I have heard horror stories of companies that have had this problem, usually ending with devastating results.”

… Facility Transition Manager, South

“I have no experience with counterfeit parts. I have heard that it is becoming a serious issue for some organizations. It could have severe implications for manufacturing, but the risks associated with safety would be my major concern.”

… Reliability/Maintenance Engineer, South

“As far as I know, we have not received any counterfeit parts at our facility.  However, we have noticed a lot of parts coming from China that are of noticeably lower quality than their American counterparts. They are marked with the country of origin, but it is irritating to have to work with sub-par components. I have been warned to look for fasteners that are marked with a higher grade than they really are, but I haven’t encountered them to date.”

… Senior Maintenance Mechanic, South

“You ask for input on counterfeit parts, but how do people know they are counterfeit? Look at the famous paintings that are considered genuine, but later discounted!”

… Engineer, Northeast

“We have not seen counterfeit parts come into our company. If they did no one has observed them.”

… Corporate Production Support Manager, Midwest

Q: How has the frequency of your encounters with counterfeit parts changed in the past few years?

“Not much. It has been spotty, but enough to be concerned.”

… Maintenance Coordinator, Mid-Atlantic

Q: How dangerous is the presence of counterfeit parts in the manufacturing supply chain to you and your operation, and why?

“Very dangerous. The rigging hardware failed prematurely and could have caused damage to the equipment or an injury. The rigging hardware was sent out for analysis and found to be defective in its casting. The bearing failures were due to bad quality-control or bad housekeeping. All of these cost us unplanned downtime.”

… Maintenance Coordinator, Mid-Atlantic

“Counterfeit parts could be devastating to our organization. They are not made to any standard and could cause catastrophic equipment failures if installed.”

… Corporate Production Support Manager, Midwest

“Counterfeit parts could pose a hazard to [our customers] if they are not appropriate for use in drinking water. Further, with the new no-lead rule, counterfeit parts could put us in violation of federal laws if we were to install lead-containing parts into our system.”

… Maintenance Engineer, West

Q: What do you know about the origin of counterfeit parts you have encountered?

“All were made in China. Our procurement department now has instructions to not purchase any parts or material from China, whether or not it is original equipment.”

… Maintenance Coordinator, Mid-Atlantic

Q: What has your company done to identify and eliminate counterfeit parts in your supply chain? How is this working?

“Independent QC verification on all parts received to ensure fidelity; any discrepancies and the shipment is rejected. This seems to be working well. Once the vendors found out we were serious, they responded because they did not wish to lose the business.”

… Maintenance Coordinator, Mid-Atlantic

“We always make sure to buy from qualified vendors before we purchase anything. We have checks and balances from the maintenance groups if the vendor wants to change a part because of obsolescence or another reason. This seems to be working well.”

… Corporate Production Support Manager, Midwest

“If we suspect a part may not [meet our standards], we have on-site equipment that allows us to determine the make-up of the material.”

… Maintenance Engineer, West

“Our first line of defense to assure product authenticity is to implement a sophisticated product inspection program. In other words, did we get what we ordered?”

… Senior Maintenance Engineer, West

One Panelist, a consultant, relates an instance he suspects involved counterfeits. His client was a maker of high-quality injected-molded parts, the dies for which used a specific type of hex socket-cap screw. “The screws were to be replaced each time the die was taken off line for service or storage,” he says. “But when a newly hired purchasing agent decided to save costs by re-sourcing the fasteners, the lower-cost screws went in fine, but would not come out.” Efforts to remove them took significant time, resulting in a “catastrophic production loss,” he says. “Many orders were lost to another supplier. I cannot imagine how scary it is today with look-alike packages and products,” he adds. “It makes you long for the days of stock inspections on the receiving dock!”