How to successfully keep your E-Mark

If you are a parts maker, and if you aren't already focusing on Europe and the After Sales market, then you should do so. In my last columns, I have told you why. New numbers prove it. In the US, new light vehicle sales dropped 18 percent in 2008, and they are projected to drop further in 2008. In the same year, European new car sales dropped only 7.8 percent. In Europe’s largest economy, Germany, sales dropped only 3 percent. We hear reports that the After Sales market is stable, with growth in the sector of cars that are older than 4 years. This is because people hold on longer to their existing cars. Our company, which always focused on Europe and After Sales, sees undiminished demand. The market has become price sensitive – and this is your chance as a low cost producer to break into this market.

For many auto parts, the key to the European market and more than 50 countries in the world is an E-Mark. We have told you in the last columns how to get one. Now for the most important part: How to keep your E-Mark. Unbeknownst to many, an E-Mark can be lost quicker than it was received.

So you have successfully completed all tests, your factory has been audited with positive results, and you received your E-Marks. What should you do now? You should be very careful.

An E-Mark is like a driver’s license. A driver’s license allows you to drive. But if you violate the rules, the license will be gone, and possibly more painful consequences will follow.

Here are some of the necessary steps you must undertake to keep your investment into the E-Mark, to keep the markets the demand an E-Mark open for your product. And to keep your company out of trouble.

1.      The product you manufacture must be exactly as the product you submitted when you applied for your E-Mark registration. Even a small change to the product can mean that you lose the E-Mark. Does that have to stop you from making improvements to you product? No it does not. If your product is being improved, you should file amendments that document the improvement. Your technical service will advise you when an amendment is necessary, and when the change of your product demands a complete re-application.

2.      Additions to your product are usually allowed, subtractions are not.

3.      You may not change the basic characteristics of your product. For instance, with a brake pad, if you change the friction material used for the testing sample you submitted, your E-Mark becomes invalid and you must re-apply.

4.      The ECE regulation that applies to your product will give you exact guidelines for how you product must be marked and packaged. At the minimum, the product must carry the E-Mark logo (Letter E with country code in a circle,) the E-Mark number assigned, the name of the company associated with the E-Mark number, a part number, and a batch number. Other rules apply for outside packaging. Even the size and shape of the E-Mark logo are tightly regulated. Make sure that the regulations are observed, that the markings are legible and permanent.

5.      Speaking of markings: Here is something that is often overlooked. Let’s assume you have a brake pad with an E-Mark, registered to your company. A company from Europe, let’s call them “TopBrake,” orders a container full of your brake pads. They want their “TopBrake” name on the pad and the packaging. You put your E-Mark number on the product, and ship it. You just made a mistake. The E-Mark number must be associated with the company name on the outside packaging and the markings on the product. But your E-Mark is in the name of your company, and not in the name of “TopBrake.” How to solve this? Add “TopBrake” to your E-Mark. It is as simple as filing an amendment for a low filing fee. Most manufacturers add all possible customers to their E-Mark document right away. Whether you add one name or 10, it costs the same. Forget to add the name, and it can cost you your E-Mark. Also, it may turn into a nasty argument with your customer who contracted that you deliver the product with a valid E-Mark. If the customer’s name is not associated with the E-Mark, then it is not valid.

6.      Also often overlooked, but highly important: You must make sure that the manufactured product is the same as the product that was applied for. You must be able to prove it, long after you have manufactured the product. In the language of the E-Mark rules, this is called “Conformity Of Production,” or COP for short. You need to have a process in place that ascertains Conformity Of Production. Usually, this amounts to sets of regular measurements taken from the running production. The results have to be documented and filed for easy retrieval. If there is a problem with a manufactured product, these COP documents will become very important.

Once you product is in the market, it must stand up to scrutiny. Someone could be involved in an accident and claims his brakes had failed. A newspaper could run a test of brake pads and come to the conclusion that the pad you manufactured is not good. Or the competition is not happy with your product taking their market share, they initiate a test of your product. You competitor claims that your product wasn’t in spec. If any of these come to the attention of the government agency that awarded your E-Mark, the government agency can order a surprise audit of your company.

The first thing the auditor will ask for are your COP documents. If you don’t have them, the auditor’s job is completed. He will go back, and recommend that your E-Mark is revoked due to a lack of sufficient COP documentation. If you can show the documentation, and if the auditor finds no problem with the data, your position is much better.

As a rule, our company performs screening tests and insists on strict COP testing for products that need an E-Mark. Quite often, we found products that failed these tests. As unfortunate as this may have been, in the end it was positive for our manufacturer and us. Had we not tested the product and had it reached the market, the results would have been catastrophic. Through rigorous testing, disasters can be prevented from happening.

When you sell to America, the importer is responsible for the product to be in compliance with U.S. regulations. When you sell to Europe, or any of the countries that adopt the ECE rules, the holder of the ECE-approval or E-Mark is responsible. Usually, the holder is you, the manufacturer. If your customer puts you under pricing pressure, you may be tempted to lower your production price by using lesser materials, or cutting corners in production. This is a bad move if it changes the characteristics of your product. If your product fails a test, you cannot blame it on the customer. You as the E-Mark holder are responsible for the quality of your product. As long as you maintain the quality of your product as initially tested, your E-Mark is safe. Let the quality slip, and the E-Mark may be taken away.

Without a valid E-Mark, your product cannot be used anymore, and must be recalled. This can become extremely costly for your company.

Next week: How to successfully market your product to Europe. 

About the author: Bertel Schmitt, Gasgoo's columnist, is CEO of Hong Kong based parts sourcing company Sinamotive. Before founding Sinamotive, with the assistance of U.S. venture capital, Mr. Schmitt was a marketing consultant to Volkswagen AG.