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THE RIGHT PART GOES BEHIND WHAT FITS

THE RIGHT PART GOES BEHIND WHAT FITS

The rules around replacement parts are complex, but worth getting your head around, writes BM Catalysts Commercial Director Mark Blinston.

While there might be more hot air than hard facts about emissions across the mainstream press about vehicle emissions, there can be no doubt that reducing toxic gas and restoring trust in the motor industry is the greatest problem faced by the trade at the moment.

Everything is geared towards reducing emissions and much of the emphasis seems to be pointed towards vehicles and how we can reduce the impact that they are having on air quality. You may be wondering what we can do about it in the aftermarket; but one thing we can do is making sure the right part is fitted to the right vehicle based on the emissions standard of the vehicle in question – the Euro level.

Vehicles and replacement emission control devices must meet specific standards for exhaust emissions before they can be offered for sale in the European Union. Emissions limits are commonly referred to as Euro standards or levels.

Emissions are measured using a standardised test cycle called the New European Driving Cycle (NEDC). The NEDC was last updated in 1997 and is gradually
being replaced by the World Light Test Procedure (WLTP), which is designed to better replicate real driving conditions. WLTP is now being applied to new vehicles (types) but does not yet apply to replacement parts.

In order to test the durability of each part emission test results are most frequently multiplied by a deterioration factor; with the adjusted result then compared to the legislative limit. Deterioration factors are designed to simulate the likely change in performance of the part after it has aged with use over time. These deterioration factors have become more stringent over time, and so when coupled with the gradual lowering of limits it becomes considerably harder to achieve a pass when testing newer parts and newer vehicles. The largest increase in deterioration factors occurred between Euro four and Euro five.

In order to meet higher emission standards, it is frequently found that the OEM part is made to a higher specification than the lower EU level part it has superseded. Legislation requires a comparison of performance between a replacement part and its OE equivalent and so it naturally follows that tougher standards + higher deterioration factors + higher performing OE parts = a real need for a higher specification replacement part.

RIGHT LEVEL

The Euro level of each vehicle prescribed at the point at which that vehicle is Type Approved. A replacement part cannot be approved to a lower Euro level than that of the original vehicle; so if the vehicle is Euro five then the replacement must be approved to Euro five levels/limits. Testing and approving this part to Euro four would mean that it cannot be proven that it meets the relevant emissions standards and therefore cannot legally be fitted to any Euro five vehicle.

There are many catalytic converter and diesel particulate filter (DPF) references that appear to be physically identical but are, in fact, designed and approved for vehicles that carry different Euro levels. This is made possible as the internal specification of the part is largely the key to the emissions performance of the vehicle. For example, the Euro five version of the close-coupled cat for the Citroen C1 requires a specification that is more than 3 times that of the Euro four version of the part. A similar story is true of the Euro four/five Fiat five00 and Ford KA. Quite apart from it being illegal to fit the Euro four version to a Euro five vehicle, it will cause poor emissions performance with a much higher chance of related vehicle issues and potential part warranty returns. It can be easy to source the cheapest product which isn’t necessarily approved to the correct Euro level – the consequence of which is then a part that will actually not perform to the standards required.

CATALOGUE
The correct cataloguing of aftermarket parts is complex and challenging and many consumers will not be aware of the Euro level of their vehicle. It is therefore down to the garage and parts distributor to ensure that the part that is being sourced is approved for sale to the correct Euro level of the vehicle in question. This is something that has recently been identified as a “problem” in the aftermarket whereby parts can be physically the same, catalogued with the same start and close dates yet be very different both in terms of the internals and what they are legally approved for sale to fit.

In an effort to reduce the number of occasions that the incorrect part is being supplied and fitted to the vehicle, MAM (Autocat) will shortly be introducing the Euro level as a search criteria when identifying the correct part for a particular vehicle. Manufacturers of catalysts and DPFs will be asked to submit the Euro level for which their part has been homologated to enable an accurate match upon lookup. This is a positive step that the aftermarket is taking to reduce vehicle emissions.

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ELECTRIC VEHICLES VS THE AFTERMARKET

ELECTRIC VEHICLES VS THE AFTERMARKET

What challenges does the lubricant industry face? With impending bans on traditional vehicles and increasing market share of EVs

At the end of last year, the UK media reported a sixth month consecutive decline in sales of diesel cars. UK Government’s uncertainty about how to treat vehicles once classed as ‘the green option’ has led to consumer caution about buying cars that might be subject to higher taxation in future.

In July 2017, the UK Government declared that from 2040, sale of motor vehicles powered with internal combustion engines, petrol or diesel, would be banned. This followed similar announcements made by the French Government earlier that year. Even Original Equipment Manufacturers (OEMs) followed suit with Volvo and more recently Jaguar Land-Rover announcing the end of petrol and diesel car sales from 2019 and 2020 respectively.

The impact on the automotive sector, its fuel and lubricant sales, as electric vehicle sales increase cannot be underestimated.

Barclays’ analysts reported that if electric cars with greater efficiency increased to one third of the current automotive sector, this would cut global oil consumption by 3.5 million barrels a day by 2025. This is roughly the equivalent of Iran’s current supply of oil at 3.8 million barrels a day that is the Organisation of Exporting Petroleum Countries (OPEC)‘s third largest member.

Globally, demand for oil is still growing. In their 2017 outlook OPEC signalled that the medium-term demand for oil for the period 2016–2022 would increase by 6.9 million barrels a day, rising from 95.4 million barrels in 2016 to around 102.3 million barrels a day by 2022. Developing countries are expected to account for the majority of this increase, with demand expected to increase here by 43.2 million barrels a day in 2016 to 49.6 million barrels a day by 2022.

A cut in automotive demand for oil would effectively wipe out half the expected increase in global oil demand by 2022. But globally, the demand for oil would still increase.

Transportation is expected to remain the largest consumer of oil products, both fuel and lubricants, well into 2040. Much of the sector faces weak competition from alternate sources of fuel and lubricants although improved efficiencies, the rise of hybrid or electric vehicles and a tightening of energy policies will help to decelerate increases in the demand for oil from this sector.

WHAT IS ALLOWED?
Details of the French and UK Governments’ decision to ban conventional internal combustion engine vehicles is still vague. Will hybrid vehicles still be allowed? What about heavy goods vehicles or diesel powered public vehicles such as taxis? Some analysts believe that Governments might have kicked an emissions issue aligned to poor air quality into the long grass. The UK faced with the prospect of fines by the European Union over the quality of its air in cities, needed to be seen to be doing something positive about the issue.

Today’s vehicles are cleaner and leaner than those of ten or twenty years ago. Exhaust after treatment devices, both catalytic converters and diesel particulate filters, have removed many post-combustion harmful gases. Car scrappage schemes promoted by both Government and car manufacturers have incentivised owners to replace ageing vehicles with more modern cars. Changes to car taxation duties reward cars with lower emissions.

Electric cars might not be the panacea for everyone. Limited battery range and the high cost of lithium power cells means that extended ranges between charges of 300 miles or more are not yet a reality. As local town run-arounds or shopper cars, electric vehicles provide a viable alternative to conventional vehicles for journeys typified by short local stops. For longer commuter journeys then electric vehicles alone do not currently provide a realistic solution in the absence of a national and comprehensive electric charging network.

Much needed investment in electric charging stations along major motorway routes and trunk roads still remains in short supply. The Petrol Retailers Association (PRA) gave evidence to UK Government’s Automated and Electric Vehicles Bill Committee in November arguing against proposals to mandate electric vehicle charge points in petrol stations and motorway service areas. Although subsidies exist for domestic installation, the Bill proposes that a larger commercial network of charging points would be paid for by fuel retailers who would, by implication, pass the charges back to motorists. Government would not fund such a scheme.

REQUIREMENTS
In terms of engine oil and lubrication requirements, hybrid vehicles act in a slightly different manner to more conventional vehicles. A distinguishing feature of hybrid electric vehicle is that the conventional engine switches off when the power available from the electrical cell exceeds that needed to propel the vehicle. This results in lower operating temperatures and higher stress during stop/start for the conventional engine, which could lead to increased sludge and varnish than that of conventional engines.

What of service intervals? In the UK, service intervals of 12,000 miles are usually expected by motorists. In America, some dealers are claiming that hybrid vehicles require oil changes every 5,000 miles or 10,000 miles if using a synthetic, more typical of conventional cars sold in that country. The move to lower viscosity oils could also confuse matters if a motorist has been used to using a 5w30 engine oil in their hybrid ten years ago and today the same, but newer, model of their much-loved car requires a lower viscosity lubricant of 0w20 or less.

For the aftermarket, although electric cars might prove a challenge today, a hybrid car is a more popular and obvious choice for motorists. They provide the assurance of extended ranges for longer journeys similar to that of conventional vehicles, with the benefit of lower emissions under town centre driving conditions.

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EXERCISING CAUTION WHEN HANDLING COMPLAINTS

EXERCISING CAUTION WHEN HANDLING COMPLAINTS

No matter what industry you work in, there will come a time when you receive a complaint based upon the services or goods you have provided.

Unfortunately, the automotive industry is no exception, and it can be easy to see such complaints as an unjustified attack on your company’s good reputation. In the heat of the moment, aggrieved business owners can jump to the defence of their company, engaging in a war of words with the complainant.

According to Gemma Carson, Head of Dispute Resolution at law firm Wright Hassall, they could do more harm than good: “Naturally, business owners can feel like they have a duty to protect their employees, and without thinking, fire back with an angrily worded email, expressing their displeasure with the original complaint.

“When emotions are running high, it is easy to get involved in a heated debate about the rights and wrongs, mistakes and failures, or actions and inactions of one party or another. It is at this point that things can escalate quickly and easily get out of control.

“The most serious issues can occur when promises or threats are made without due consideration given to any existing contractual agreements between the two parties.

“To reduce the risk of worsening the situation, there is plenty that can be done and it should start with a careful consideration of the content of the complaint. The pressure may be on, but take your time and ensure you make no commitments and no threats.

“Allow yourself time to properly cool down before sending a response, as emails sent while emotions are still running high have a nasty habit of biting back later down the line. “Instead, begin by drafting your email and save it to your ‘virtual mantelpiece’. This will give you time to review the situation and think carefully about what you want to say, instead of hitting back with a knee-jerk reaction.

“It is also important to check whether a service agreement and/or a contract exists between the parties. You should read any agreements carefully and check what they actually contain.“With an agreement in place, you may be able to respond to the complaint by highlighting any relevant contractual terms that may help you manage the situation.

DON’T IGNORE
“When dealing with a complaint, it is important to be proactive. By acting quickly, you can help diffuse the situation without the need for any legal involvement.

“Personal, face-to-face meetings will often help resolve issues before they can escalate. It is best to either raise the matter directly or if you suspect it to be more serious, to seek legal advice before you make contact.

“If it does feel serious, you should ensure you retain all of the relevant information relating to the complaint, including documents, correspondence and any products or specimen products from the same batch. It can help if you carry out and document any inspections of equipment or machinery.

GET HELP
“Seeking legal advice early on does not necessarily mean a serious legal dispute has arisen.

“Dispute resolution advice is very effective when delivered soon after the complaint is received, but your lawyers do not need to take an active role in the issue. They can offer strategic legal guidance focused on resolving complaint situations and diffusing potential disputes, whilst preserving the commercial position for the future.

“The most important legal factor to remember is that making a rash statement or taking a knee- jerk decision to stop providing your services or products, by sending that angry e-mail draft without first putting it on the virtual mantelpiece, may cause a serious breach of contract.

“If nothing else you risk a serious argument and potentially a threat of injunctive proceedings. In simple terms, a breach of contract can entitle the party affected by it to terminate the contract and then bring legal proceedings against you for damages.

“For this reason, sending that inflammatory e-mail without firstconsideringthe consequences could be a huge mistake that ends up costing time and money, both of which could be better spent managing or growing the business.

“Finally, where parties have become so embroiled that legal proceedings are not only threatened, but seem the only option, choose to work with experienced lawyers who understand commercial disputes and demonstrate a commitment to reaching an early, commercial and cost- effective resolution” concluded Carson.

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PHOENIX COMPANIES RISING FROM THE ASHES

PHOENIX COMPANIES RISING FROM THE ASHES

It’s a sad fact of life that businesses can and do fail and the fallout can impact upon many – owners, shareholders, employees, customers and suppliers alike. Often there is nothing underhand about the failure – the company is wounded fatally by a lost contract, a massive hike in rent or rates, or has been unable to adapt to changing market conditions.

Occasionally, however, firms are set up to fail through the deliberate actions of their management with a view to defrauding creditors. In certain situations, directors of the failed company turn to what is known as a ‘phoenix’ company.

PHOENIX RISING
‘Phoenixing’, or ‘phoenixism’, are terms that describe the practice of carrying on the same business or trading successively through a series of companies which in turn becomes insolvent – the idea being that a new business rises from the ashes of an old one, like the Phoenix bird of Greek myth, hence the term. Each time this happens, the business of the insolvent company (but not its’ debts), is transferred to a new, but similar, phoenix company, usually through the use of a pre-pack administration. A pre-pack administration involves the business of the liquidated company being sold as a ‘going concern’, (i.e. as an operating business) through a process orchestrated by an appointed insolvency practitioner. The insolvent company then ceases to trade and might enter into formal insolvency proceedings or be dissolved.

Phoenixing often harbours negative connotations, mainly because of the actions of directors who force their companies into insolvency to then purchase back company assets through the new company, leaving behind any liabilities in the insolvent company. The process often involves financial loss being suffered by the creditors of the failed company – a practice that can both leave a nasty taste in the mouth and give phoenix companies a rather bad reputation.

There is no doubt that in rare circumstances, the directors of a company do set out to commit insolvency fraud and so will deliberately reform a business using a phoenix company to avoid paying creditors. They will ensure that the phoenix company is set up so that it appears slightly different from the insolvent company. The business will continue to trade and operate and the creditors of the insolvent company will not usually recover their debts as they remain with the insolvent company – a separate legal entity – and will not be transferred over to the newly formed company. The bad news for creditors and suppliers is that they will have no contractual claim against the new company for debts incurred by the old, defunct, company.

THE LAW SAYS
The governing law of England and Wales allows shareholders, directors and employees of insolvent companies to set up new companies to carry on a similar business, so long as the individuals involved aren’t personally bankrupt or disqualified from acting in the management of a limited company, and the trading name of the new company is not the same or similar to that of the insolvent company. Setting up as a new entity is legal if the process has been managed properly. Entrenched company law principles mean that a limited liability company is a legal entity separate from that of its shareholders and directors. Except in very limited circumstances, the responsibility for debts incurred remain that of the company, subject to the actions of the company directors.

One circumstance where a director can be made personally liable, jointly and severally with the company, for all the relevant debts of the new company, is where they contravene the Insolvency Act 1986 by acting as a director of a company with a prohibited name (i.e. a name which is similar to suggest an association with the previous company’s name). Further, the director will also be liable to a fine or potential imprisonment.

SEEKING SOLACE
So, what can you do if you suspect some sort of insolvency fraud being undertaken by a company that you are dealing with? What happens where you find yourself in the situation where you have supplied a company and your invoice has not been paid? What should you if do you’re also unable to reach anyone at the company to speak to about the money that you are owed?

The company at this point may or may not be insolvent. If the company in question is insolvent, the appointed insolvency practitioner’s function is to investigate the practices of the company and distribute any assets found to the creditors of the business. Predominantly, the underlying assets of the insolvent company are required to be sold at market value and not (deliberately) at an undervalue. You, as a creditor of this business, should have an interest in such investigations and you should speak to and assist the insolvency practitioner where possible.

Company directors owe numerous duties to their company and the key duties are codified in the Companies Act 2006. These include promoting the success of the company, exercising independent judgement, exercising reasonable care, skill and judgement, and avoiding conflicts of interests. Where a company is threatened with or starts to undergo insolvency proceedings, directors not only owe duties to the company, but also to the creditors of the company and a number of provisions of the Insolvency Act 1986 apply in this case.

STRICT RULES
There are strict regulations placed on the directors of an insolvent company and any appointed insolvency practitioner regarding the use of a phoenix company to carry on the business of an insolvent company. The intention of the regulations is to protect the interests of unsecured creditors and to prevent company directors from escaping their obligations. It is a criminal offence under the Insolvency Act to knowingly carry on business with an intention to defraud creditors.

If this is proven, an insolvency practitioner may make the decision that the director is liable to make a contribution to the company’s assets on winding up. Remember, it is legal for a phoenix company to be formed from the insolvency of a prior company. However, any director that is subject to a disqualification order or a bankruptcy order cannot act as a director of the newly formed company. You may suspect that a director of a company that you are dealing with may be acting in breach of a disqualification or bankruptcy order and if this is the case, you should also report this to the Insolvency Service.

DEAL WITH IT
Information is available online, free, at Companies House to any member of the public who wishes to see who is registered as a director of a company that they are dealing with. The name of the company (this may be different from the name with what the company trades as) or the company number will be required to use the Companies House search function.

Despite the losses that can be experienced by a creditor because of the use of a phoenix company that may have been subject to insolvency fraud, the financial failure of a majority of UK companies is not usually as a result of wrong doing nor the misconduct of company directors. Companies can be dissolved or face financial difficulties for a variety of reasons.

One protective solution, obvious as it sounds, is to conduct preliminary investigations on new customers before entering into a trade agreements or offering trade credit. As noted above, check the publicly available register at Companies House for information on company directors and their companies, seek trade references, and also carry out credit checks. Forewarned is forearmed.

It may be worth checking to see whether your supplier contracts have, or possibly should have, clauses which aim to protect your legal ownership of the supplied goods until payment has been made by a customer. Some supplier contracts may include what are known as retention of title clauses which will state that the goods delivered by a supplier remain their property until payment by the customer has been made. Legal advice should be sought as ‘retention of title’ clauses require careful thought and drafting to ensure that they are effective, an event of insolvency should be properly provided for in such terms and conditions in order for a supplier to limit exposure to the risk of non-payment.

WHAT TO BE AWARE OF
Directors who don’t conduct business in line with their legal obligations face potential disqualification from acting as a company director. The Company Directors Disqualification Act 1986 prohibits directors whose conduct led to the insolvency of a company from taking on similar roles elsewhere for a prescribed length of time. If, as a creditor, you feel or suspect that a director of the company you are dealing with is conducting their business in an unfit manner, you can report them either to the Insolvency Service, Companies House or the Serious Fraud Office.

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EMPLOYEE MONITORING

EMPLOYEE MONITORING

Employee monitoring methods should be considered carefully

A recent decision by the Grand Chamber of the European Court of Human Rights has brought the question of employee monitoring to the forefront of employers’ minds once again. The Grand Chamber in Bărbulescu v Romania examined the ability of employers to monitor their employees’ work, email accounts and in particular, the extent to which employers can check whether employees are using email accounts for solely work-related purposes.

Mr Bărbulescu was dismissed by his employer for unauthorised personal use of the internet. The dismissal arose as a result of allegation that Bărbulescu had been using a Yahoo messenger account whilst at work. Following various decisions in Romania and in the European courts, the Grand Chamber of the ECHR determined that Bărbulescu’s private life and correspondence had been infringed.

It is worth noting that employers can be found to be vicariously liable for the actions of their employees in the course of their duties. This means that employers may find themselves liable for their employees’ actions if the employee causes damage or loss to a third party. Employers therefore often find that they have a heightened interest in understanding – and keeping tabs on – the activities of their employees.

EMAIL AND INTERNET USE
The Grand Chamber decision in Bărbulescu v Romania highlights the fine balance between an employee’s reasonable expectation of privacy and an employer’s right to check the activities of those working for them. It was not sufficient for the employer to simply inform the employee that there was an internet usage policy in place but instead, the Grand Chamber found the employee should also have been made aware of the extent and nature of the monitoring activities that the employer was putting in place.

In the UK, the monitoring of employees is heavily regulated by existing legislation, which places limitations on the
powers of employers to monitor their employees’ private communications, including the Data Protection Act 1998 (and soon to be the General Data Protection Regulation, which comes into force in May 2018). Employers must provide
legitimate reason to justify the monitoring of an employee’s communications. This requires some form of assessment to be in place in order to decide whether legitimate reasons are in place.

The importance of an assessment can also be found in the Information Commissioner’s Employment Practices Code in the UK. The Code recommends that employers carry out an impact assessment, taking into account factors such as the purpose behind the monitoring arrangement and any benefits or adverse effects that arise from this monitoring.

Ultimately, employers must be satisfied that they have achieved the correct balance between protecting workers’ privacy and the interests of the business. Carrying out an impact assessment in relation to communications monitoring is one way in which employers can demonstrate that they have achieved this. Employers should also ensure they have a communications monitoring policy in place and where possible, this should be backed up with specific training on the use of IT and email systems.

DRUG AND ALCOHOL MISUSE
Employers have a responsibility to look after the wellbeing, health and safety of employees whilst they are in the workplace, and this duty may extend to ensuring that employees are not misusing drugs or alcohol.

The extent to which employers will need to monitor their employees’ use of alcohol or indeed drugs, will depend on the particular environment in which the business is based. For instance, in some circumstances, it may be appropriate for employees to consume alcohol whilst entertaining clients. For other industries, however, employers will need to be much more cautious about their employees’ use of alcohol or drugs. Those whose staff use vehicles as part of their jobs, for instance, will need to maintain a higher level of vigilance in this respect.

Employers may want to consider whether it is necessary to carry out drug screening or alcohol testing. This will – of course – only be relevant in particular industries, however, for those where this is likely to be an issue, then employers should ensure that reference to screening or testing is included in a policy given to all staff.

Even with a drug screening or alcohol testing policy in place, employers will not be able to require staff to submit to testing without their specific consent to do so. One option is to draft the monitoring policy to say that withholding consent is a misconduct offence in itself.

TRACKING
Employers whose staff work ‘off-site’ – say when driving – may find it particularly difficult to know the exact movements of their employees during their working hours. Improvements in technology have, however, made employee accountability in the workplace much easier in recent years. Again, industries which rely on employees driving vehicles may find this kind of technology particularly useful. GPS, for instance, highlights if drivers are deviating from their planned routes or if there is traffic preventing them from reaching their destination.

If employers do intend to monitor vehicles they should ensure that they provide a policy which sets out the nature and extent of the monitoring. Employers should satisfy themselves that their employees are aware of the policy that is in place, what information is recorded and the purpose for that recording. Where the vehicle is used for both private and business use employers, should be particularly wary, as monitoring movements when the vehicle is being used privately will rarely (if ever) be justified.

CONCLUSION
Monitoring employees can take place in a variety of ways and employers should carefully consider which form of monitoring is necessary for their business, without being unnecessarily intrusive to the privacy of staff. Carrying out impact assessments are often a useful way of determining whether the monitoring is truly justifiable.

Case law such as Bărbulescu v Romania clearly demonstrates that the courts take the privacy of staff in the workplace very seriously. In order to reduce the risk of employee complaints, employers should try to be transparent and honest with employees about monitoring which they may be subject to.

Getting employee monitoring wrong can have a significant impact. Employers could face discrimination complaints or employees resigning and claiming constructive dismissal. Employees could argue that their rights under the Data Protection Act 1998 – or even the Human Rights Act 1998 – have been infringed. In addition to the cost and time associated with defending a claim, an employer could be found liable by a court, employment tribunal or the Information Commissioner’s Office, and ordered to pay compensation.

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VLS RECEIVES 50TH CASE

VLS RECEIVES 50TH CASE

As the Verification of Lubricant Specifications receives its 50th case complaint, the Director reviews the cases it has investigated so far

VLS was formed in 2013, when the industry faced a real problem. Lubricant products were being sold by some new market entrants with claims that just did not seem to be believable. Closer inspection found that occasionally sub- standard formulations provided by newly-established companies were being passed off as the latest specifications to their customers, or even failing to perform effectively at low temperatures.

Even though the majority of lubricants were compliant with relevant market standards and manufacturer approvals, out of this concern reputable lubricant blenders and manufacturers came together to launch the Verification of Lubricant Specifications (VLS), an industry-led service that independently validates complaints regarding the technical specifications and performance claims of products.

Four years on, VLS has tackled 50 cases, receiving its 50th complaint in September this year. Looking back over the cases so far presents some interesting reading.

MISLEADING CLAIMS
The first case was received in March 2014. The complaint related to an engine oil which was making unrealistic claims that did not comply with ACEA sequences for which it was claimed to be suitable. At the time, VLS was still relatively new and people did not know what to expect. The company involved soon saw that it meant business as the case was escalated to Trading Standards and the company suspended from membership of the United Kingdom Lubricants Association (UKLA) until the matter was resolved.

Non-compliance with ACEA has accounted for the majority (60 percent) of cases. These engine oil sequences change every four years to take account of developments in emission regulations and technical developments in OEM engine design. Lubricant marketers need to manage their stockholding to ensure they are not left with old stock on the shelves when the new sequences become mandatory. VLS cases have shown that they will get reported, investigated and required to withdraw mislabelled stock if necessary.

COLD WEATHER
Around a quarter of cases have related to low temperature properties, which is a particular safety issue. In one case a lubricant was found to turn solid at temperatures of minus 40 degrees centigrade. Whilst the temperature in some parts of the country rarely stays below freezing for a sustained length of time, in Scotland, extreme temperatures are not uncommon. To be within specification, lubricants must be able to perform even in these extreme conditions to avoid damage to vehicles.

OIL TYPES
Of the cases investigated three quarters have related to passenger vehicle engine oils. This is in line with expectations, as automotive comprises a significant sector in the marketplace, as much as half of all lubricants sold. However, VLS’ remit does include everything from engine to transmission and gear oil and all have featured in cases. Seven cases of automotive gear oils with suspected low temperature properties have been investigated. Cases have also been reported in automotive transmission fluids and hydraulic fluids. VLS has even investigated agricultural tractor oil. So far only two cases have been received relating to industrial products and one in the marine sector. VLS plans to focus on raising awareness in this sector as well.

AFTERMARKET AND BEYOND

Over the course of 2017 the number of cases brought to the attention of the organisation has reduced as the initial issues of non-compliance have been tackled in the wider lubricant marketplace. There is now a greater awareness amongst marketers and blenders as to what constitutes a compliant product.

We know this because blenders report that there is a greater degree of compliance in the market place, additive companies tell us that they are engaging with companies that they have not had a relationship with previously, and European body ATIEL has also begun its own programme of policing conformity.

If you have any concerns about lubricant products then you can report them to VLS by calling 01442 875922 or emailing admin@ukla-vls.org. uk. VLS handles all cases anonymously through a clearly defined process which includes technical review by a panel of experts from across the industry and dialogue with the manufacturer and all relevant parties to work together to resolve any issues.

You can find out more about VLS by visiting their website: www.ukla-vls.org.uk or calling 01442 875922.

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AUTOMATED FUTURE FOR FACTOR CHAIN

AUTOMATED FUTURE FOR FACTOR CHAIN

Large German factor Stahlgruber combines robotics and logistics in hub reboot. CAT contributor Alan Smithee gets the latest. 

Factor gets an upgrade

How about this for a warehouse upgrade? German motor factor Stahlgruber needed to expand and in typical fashion, bosses at the firm put their minds to achieve the most efficient solution possible.

What they came up with was a completely robotic 23,000 sq. ft extension, connected to the existing facility by a 60-metre bridge with a pallet conveyor. Working with warehouse automation firm TGW Logistics, the firm built the new new automatic ‘mini-load’ warehouse and the entire conveyor system for plastuc crates known as ‘totes’, roll containers and pallets, plus the storage and retrieval machines. TGW was responsible for the design and installation of the pallet conveyor and storage and retrieval equipment in the receiving area.

The new 26-metre-high automatic mini-load warehouse consists of two storage levels with nine aisles each, and two separate storage and retrieval levels serviced by machines. ‘Twister’ load handling devices transport the goods to and from 165,800 storage locations at rates of up to 118 movements per hour, with each unit identified by barcode and tracked on Stahlgruber’s computer system.

As part of the new facility, TGW built a new receiving terminal that makes the best of the received goods’ travel through the logistics centre. Modifications to the existing pallet handling system means suppliers now deliver all pallets pre-labelled with a barcode indicating the shipping unit.

On receipt in pallets or grid- boxes, items are routed either directly to the existing pallet warehouse over the bridge via conveyor; to eight picking stations for direct picking from pallet; or to 44 decanting workstations connected to the tote conveyor system for unpacking the pallet into the tote crates. A display at each decanting station informs the employees about the required number of items to put into a provided empty tote, which is then transported to the automatic mini-load storage warehouse.

The existing warehouse has also been redesigned with ‘ergonomic’ workstations for receiving, repacking, picking and shipping areas, with everything to hand and technology measuring weights etc in order to provide the best possible conditions for the employees. There is little need for employees to walk very far at all in fact, as the facility has four kilometers of conveyors whizzing totes and pallets wherever they need to go. Bosses reckon on employees picking 210 totes per hour. The same picking stations also pick from full pallet loads delivered directly from the receiving area via TGW pallet lifts and a double transfer car.

TGW also added a new shipping line to the shipping area and expanded the dispatch sorters. The changes to the twenty-year-old conveyor system in the shipping area increased performance significantly and dramatically reduced the noise emissions. The logistics centre now holds over 155,000 SKUs, with up to 100,000 orders leaving each day in a two-shift operation that provides customers with fast, accurate deliveries.

Even more surprising is that the upgrade, was completed in a year without having to shut the warehouse. “Work in this area was carried out at weekends, to avoid affecting the facility’s performance during the reconstruction phase,” explained TGW Project Manager Josef Eibel. “The coordination was challenging at times, but the team worked together perfectly and the high-tech upgrade for factor shipping area’s performance was doubled. The new system provides Stahlgruber with a supply chain that provides operational efficiencies as well as enhancing its high levels of customer service.”

Is this an exciting future, or are robots threatening the way we work? Why not email CAT and let us know your views.

MINI-LOAD SYSTEMS
‘Mini-Load’ systems, so-called because they use small crates called ‘totes’ in conjunction with a tall and fast robotic picking known as Automated Storage and Retrieval. When used with other systems mentioned, they can increase space utilisation by 90 percent, productivity by 90 percent and throughput up to 750 lines per hour. Who wouldn’t want that?

Posted in CAT Know-How, Factor & Supplier News, NewsComments (0)

AN INSIDE JOB

AN INSIDE JOB

 It can leave a bad taste when an employee commits fraud, but it must be dealt with, writes Adam Bernstein.

It’s bad enough losing out to theft committed by customers and third-party criminals, but it can leave a particularly nasty taste in the mouth when those most trusted – staff – commit criminal acts against the business that employs them.

According to Action Fraud, one in five small businesses will have been defrauded at some point in their trading history – sometimes to the point of bringing the business to its knees.

In March 2010, The Journal reported that a 21-year-old garage – Knights of Newcastle – was put out of business after a trusted employee, Colin Prudham, used the company computer to print off 419 fake MOT test certificates. The fraud only earned Prudham £12,500. In February 2011, a former employee in the accounts department was convicted for stealing over £50,000 from Lanehouse Service Station in Weymouth over a six-year period. The managing director, Peter Amery, described Joyce Britnell’s actions as a “major betrayal.”

And in February 2013, a bookkeeper stole £210,000 from a family business involved in motorcycle publishing run by her friends. Amanda Stevens took the money for, among things, hair and clothes leaving the company – Redcat – to pick up the pieces. The fraud committed over a number of years was only discovered when the VAT couldn’t be paid.

TAKING ACTION
While fraud is an ever-present risk, and a destructive one at that, employers can take preventative measures.

Background
The first step is to proactively check on everyone that is employed by the business, especially where they have access to sensitive systems or the company bank account. Quite simply, firms need to know exactly who they are employing. References should be sought and followed up with calls; the matter shouldn’t be dropped until satisfactory answers are received. Everyone from the cleaner to the members of the board, as well as contractors, should be subject to background checks. At the very minimum, it’s important to confirm an employee’s identity, date of birth, residential address, qualifications, employment history, criminal history and financial background. The process can be undertaken as part of the statutory obligation to ensure that an employee has the legal right to work in the UK.

Another option is to ask for a recent bank or utility statement, as well as details to check on qualifications, or a marriage certificate if a married woman has changed her name. You can also ask for past P45 or P60s, as well as data from Disclosure and Barring Service. Credit agency Experian offer background checks for those in the automotive sector to enable employers to check on, for example, qualifications and experience. At the same time, by signing up with one of the credit reference agencies – Experian, Equifax or Callcredit – employers will be able to monitor if employee (or third party) activity has changed the financial status of the business.

Policies
Another large step that a business can take to protect its position is to engender the ethos that fraud is not tolerated within the business. This starts at the top with everyone being able to see that the management plays by the same rules that employees have to follow. Policies and procedures need to be written, but they also need ‘buy-in’ from employees which requires consultation. On joining, every employee should be given, among things, an anti-fraud policy. If a fraud should occur and the employee concerned is dismissed, the event and the consequences should be widely communicated to all staff as a deterrent.

Control access
As harsh as it sounds, firms need to strictly control access to their premises and systems. As soon as an employee leaves the company their access to systems should be terminated immediately. Passwords should be changed, passes revoked and possession should be regained of company laptops and mobiles. (It doesn’t hurt to regularly change passwords held and used by all employees).

Take action
If a faked history or worse, criminality, is suspected, it’s important to take good legal advice with a view to with- drawing any employment offer made (or dismissing the employee). The situation should be reported to the police or, in the case of illegal working, to the UK Border Agency, as well as to the recruitment agency if appropriate. Ignoring the issue will only shuffle the problem to another employer; it could also leave the firm open to claims from future employers who weren’t warned about the ‘rogue’ employee.

Check further
Processes need to be put in place so that no one person has sole control over payment systems, chequebooks or the ability to singly authorise purchases over a given (low) value. Invoices should be checked to ensure that they are from genuine suppliers; unexpected requests to change bank accounts should verified – every time; and suppliers should be informed in writing each time a payment is made.

It’s important to also prevent premium rate and international numbers from being dialled out on company phones. Premium rate fraud – also known as PBX or dial-through fraud) involved out of hours calls being made to particularly expensive numbers. Similarly, phone logs should be regularly checked for increased use or unusual call activity.

Lastly, firms should take steps to destroy any documents with sensitive information that may allow a fraudster to misuse the corporate identity for criminal gain.

For paper, this means acquiring a fine cut cross shredder, while for data, firms should securely wipe computers (physically destroying hard drives and USB sticks) while factory resetting mobile devices. At the same time, time spent signing up on Companies House and other agencies websites seeking out their online protections is worthwhile. Companies House, for example, offers the PROOF scheme in relation to the changing of official corporate details; it helps prevent the hijacking of a company.

Fraud is an unpleasant fact of life. However, those firms that make it harder for employees who are criminally minded will be much better off. By removing the opportunity they’ll remove the temptation.

WHAT TO BE AWARE OF

There are countless different ways that an employee can abuse trust. However, the main forms that firms should be on the watch for are:
Procurement fraud: Fraud relating to company purchases of goods, services or works commissioned. Goods are invoiced but not delivered, or are subject to inflated prices.

Travel and subsistence fraud: Where employees claim for, say, food and mileage not incurred or which is higher than receipts can show.

Personnel management: Staff on sick leave but moonlighting elsewhere, misuse of company equipment and time for private purposes, or the use of false references and qualifications.

Exploitation of assets and information: The passing of internal company information for personal gain.

Payment fraud: The creation of fake accounts and invoices, the redirection of cheques and other payments, or the processing payments to the fraudulent individual.

Receipt fraud: The theft of inbound monies or where records for monies owed are altered.

False accounting: Changing records and accounts to misrepresent their true value, to enhance or alter their appearance, to gain funds from a bank, report overly high profits or to hide losses.

Posted in CAT Know-How, Factor & Supplier News, Garage News, News, Retailer NewsComments (0)

RECON WITH RISK AND MANAGE YOUR PREMIUM

RECON WITH RISK AND MANAGE YOUR PREMIUM

Insurance premiums might seem like they only go one way but manage your risks and you could get a reduction.

Joe Howard
Aftermarket Lead Broker, Hugh J Boswell

Maximising efficiencies and controlling costs are the buzzwords of the aftermarket right now. You can add to that getting the right insurance policy is critical otherwise insurance costs can soon become unsustainable, or worse your policy fails to adequately cover any losses incurred in the event of a claim being made. A large number of the factors insurance companies review, such as those above, are essential to your business, thus limiting your ability to alter them for the same insurance premiums. So, what factors are there in your control?

CLAIMS FREQUENCY
It sounds obvious to say, but reduce your claims, and your premiums will be lower. The most effective way to manage your claims frequency is to develop a company culture that works towards eliminating or reducing incidents.

A motor factor’s van f leet is most likely to be affected by a high claims frequency. So, how are policy holders protecting themselves?

For example, if motor claims are an issue for your business, start there. Employing drivers who aren’t as careful driving your vehicles as they are driving their own can result in claims. One potential solution? Making them responsible for paying the excess in the event of an accident encourages them to be more circumspect in your vehicles. Plus, incentivising them with a bonus if they avoid any fault accidents after, say three years, can add additional positive motivation as well.

To lower your insurer’s exposure to risk and therefore lower your premiums, purchasing vehicles with modern safety kit such as autonomous emergency braking is another way to minimise road traffic incidents. Insurance companies are now starting to build these into their pricing.

Of course, claims can’t always be avoided, and damage limitation sometimes needs to apply. When it comes to motor accidents, capturing information at the time, including photographs, or/and dash cam footage can help avoid fraudulent claims and make for a speedier resolution. An essential, but often overlooked element in managing claims costs is the early notification of your claim to your broker or insurer. Amongst other benefits, this helps manage (often expensive) third party claims management costs.

The most significant aspect here is age. Drivers under 21 pose the largest risk and are looked at very unfavourably by insurance companies. With motor policies running at loss for many insurance companies, the market has seen further tightening, with under 25’s and any drivers with less than 2 years’ experience often in the firing line. Restricting drivers to specific types of vehicle use and driver training are just some of the ways you can help alleviate costs here.

KEEP SAFE
Away from the roads, other ‘claims hotspots’ in the aftermarket business often revolve around health and safety. So being thorough with plant and equipment maintenance can reduce the number of claims resulting from accidents. Equally, protecting your staff well (e.g. steel toe-capped boots) strengthens a health and safety culture that reduces accidents.

MISCONCEPTION
There is a misconception that insurance companies offer f lat rate discounts for some practices, products or behaviours, which in most cases is simply untrue. A typical example of this is the installation of vehicle trackers. However, don’t let that deter you. A good insurance broker should be using such information, along with their knowledge of your business, to present a portfolio of evidence to insurance companies that your business is a desirable risk.

In some higher risk areas, insurers may have minimum security requirements to cover your business premises, such as red care police response alarm. Generally though, the better security measures you have installed, the more discounts the insurer can apply. The same also applies to vehicles, but in addition to your postcode, insurers also look at the vehicle type and its attractiveness to thieves.

If you would like to discuss anything raised in this article, please contact Boswell Aftermarket on 01603 626155.

TYPES OF COVER

The product range required to protect a modern business is vast but typically, most aftermarket businesses will be protected by at least one, or maybe all of the following products:

  • Commercial combined;

Covering all the commercial elements of a business – from employers,public and product liability,to buildings and stock,as well as business interruption,loss of revenue, etc.

  • Motorfleet;

Insuring your vehicles.

  • Motortrade; effectively garages, covering mechanics in customers’ vehicles, property, defective workmanship, accidents, etc.

When an insurer is calculating the weight of risk your business carries, there is a multitude of factors they consider, including;

  • Location (likelihood of theft and flood)
  • Value of stock and tools
  • Number&value of your vehicles
  • Property rebuild value Business function,e.gtrading in safety critical parts will carry higher premiums than car accessory retail.

If you would like to discuss anything raised in this article, please contact Boswell Aftermarket on 01603 626155.

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KNOW YOUR LIMITS: SET AN ALCOHOL POLICY

KNOW YOUR LIMITS: SET AN ALCOHOL POLICY

What is the best policy for booze in the workplace?

Sensible policies for alcohol at work are encouraged

Do you have a policy on alcohol in the workplace? If you don’t then you are hardly unusual as most British companies either don’t have anything written at all, or they swing the other way and have an absolute zero-tolerance policy… which may or may not be enforced.

However, you should have a policy in place and have the means to enforce it. As the trend for fines for corporate manslaughter and injury continues to significantly increase across the UK, the emphasis on employers to operate strong and effective health and safety policies and practices has never been more vital.

KNOW THE LAW
Aside from drugs and alcohol costing British businesses in excess of £6 billion per year in lost productivity, under the Transport and Works Act 1992 it is a criminal offence for any worker to be unfit to operate due to drink or drugs and employers must show due diligence to prevent such offences from occurring in the workplace.
Laws that relate to drink- driving are of special interest to motor factors or any other business that has a van fleet. Don’t forget that limits vary within the UK with England, Wales and Northern Ireland having the highest permitted limit of 35 micrograms per 100ml of breath, compared to Scotland’s reduced limit of 22 micrograms, which is in line with the majority of the rest of Western Europe.

BEST PRACTICE
Of course, these limits are perhaps moot if your company has an absolute zero policy on alcohol. However, such a policy might not actually be the best plan. Suzannah Robin, a Director at breathalyzer maker AlcoDigital said: “One of the first steps in setting best practice policy is deciding a company alcohol limit. There will be many factors determining what this should be and it will very much depend on your business operations, however, we would always recommend that an employer sets the limit below the current legal drink-driving limit rather than at a dead zero”.

“Whilst zero may sound like a target every business should be aiming for, it can also cause issues where there may be discrepancies in results, caused by things such as liquor in chocolates or alcohol in medicines. Instead, using a scale of differing limits to determine the next steps an employer should instigate in the event of a positive alcohol test will provide staff with a clear set of rules and help to avoid any unjustified gross misconduct disciplinaries” she added.

EVIDENCE
If a company intends to screen staff on a regular basis it can use a Home Office approved breathalyzer. However, should a screening test reveal a positive result, a company will be obliged to re-test the employee.

Of course it isn’t just about the type of equipment being used, but also how the procedure is carried out and followed through. This means making sure staff implementing alcohol workplace policy have the sufficient training to perform such tests fairly and effectively. Robin explained: “If an employer does not follow best practice policy this can cause issues further down the line, particularly if an employee has tested positive for alcohol. Therefore, professional and reliable training is absolutely crucial for those being assigned to implement alcohol testing policies in the workplace.”

Posted in CAT Know-How, Factor & Supplier News, Garage News, News, Retailer NewsComments (0)

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