Transcription
32 Spring 2012
By Ginny Hoyle L awrimoreBuyeBew rareCounterfeit Construction M aterialsare F looding the U.S. M arketIf a deal seems too good to be true, then it probably is.That may sound like something your dad would say, but it’s actuallythe latest advice experts from the University of Florida are giving builders,manufacturers and consumers regarding construction industry products.They say that substandard items ranging from bolts and fasteners to heavyequipment like scaffolds and cranes are finding their way onto American job sites atan alarming rate.Unauthorized factories, particularly in China and India, use low-grade steel andlax manufacturing standards to cheaply produce convincing copies of the authenticconstruction products that are infiltrating the global market. It’s the same sort ofdark market that delivers fake Gucci bags to New York City’s Canal Street tourists,but with one significant difference — knock-off handbags rarely kill or maim.It’s a catastrophe waiting to happen, according to an anti-counterfeiting operations expert at Underwriters Laboratories. It's even harder to draw attention to thehouse of cards because few in the construction business want to admit when theyhave been duped into buying counterfeit products.Explore33
“Everyone is afraidof litigation or justembarrassed to admitthat they got stuck witha counterfeit product.” — Edward Minchin34 Spring 2012But that is exactly what they mustdo, according to a 2011 report preparedby a team from the University of Floridaworking with researchers from TsinghuaUniversity in Beijing.“Everyone is afraid of litigation or justembarrassed to admit that they got stuckwith a counterfeit product,” says EdwardMinchin, associate professor at UF’sM.E. Rinker Sr. School of Building Construction, and lead investigator for thestudy. “They don’t want to tell anyone.”The team, which also included UFbuilding construction researcher Russell Walters, spent 16 months personallyinterviewing 192 major players in theconstruction industry in seven countries.They sought to find out how pervasivethe problem has become, what factorsare supporting the growth of counterfeitproducts in construction, and how buyerscan best protect themselves. The Construction Industry Institute funded thestudy and the resulting report.“Everybody in the industry rightdown to the homebuilder should beconcerned about this,” says Minchin.In the U.S. and Canada, 76 percentof the contractors, manufacturers, suppliers and builders interviewed in thestudy said that they had personally hada problem with a counterfeit item orknew of someone who had. The copycat products were found most oftenbecause they had failed, only occasionally did inspectors identify items beforethey were able to cause any damage.Almost half of the interviewees saidthat they had received counterfeitproducts directly from the manufacturer, but that most had come throughtrusted suppliers and distributors.The researchers focused on classicalcounterfeiting — knock-offs bearingthe logos, markings and sometimeslegitimate serial numbers lifted fromproducts of respected manufacturers.But they found that the industry hasan even bigger problem with productsbearing no brand name that are shippedwith documentation falsely certifyingthat the product is of a certain quality,has met required standard material testing, or possesses important properties.Construction professionals andmanufacturers in China indicated thatthe push to reduce construction costsis driving the success of counterfeiters.One interviewee noted that using lowgrade steel in place of structural steelcut costs in half — basically boostingprofits and allowing the counterfeitmanufacturer to undercut the authenticcompetition.But government policy and culturaldifferences between construction andmanufacturing professionals in Chinaand the U.S. seem to complicate theproblem further. While it’s clear thatsome distributors purchase sub-standardproducts and purposefully re-brandthem to fool unwary clients, some Chinese manufacturers send their sub-standard goods to market because they feelthat they are, indeed, good enough.In short, there is a recognizable gapbetween U.S. and Chinese expectationsfor manufacturing standards.Interviewees in China indicated thattheir government, in some cases, lacksthe power to enforce rules that couldstem the flow of counterfeit goods fromtheir country, but some felt that government officials simply did not understandhow the businesses operate.The report found that the most likelyproducts to be counterfeited are products that are bought in bulk, such as rawsteel and steel products like pipe, bolts,fittings and valves. These items arecheap to make, and therefore, profitable.But electrical devices like extensioncords and circuit breakers are commonitems for counterfeiters as well. U.S.Customs and Border Protection agentsconfiscated 3.5 million worth of counterfeit circuit breakers in 2008, according to a special report in the EngineeringNews-Record that expanded on the UFteam’s research.
TOP376%63%Respondents who hadexperienced a problemwith counterfeit items orknew someone who had.TopSource Countries:1. China2. India3. United States**U.S. counterfeits to Canadafrom third country source.Respondents who hadreceived counterfeitproducts directly fromthe manfacturer throughtrusted suppliers.Theteam spent 16 months personally interviewing 192 major players in the construction industry inseven countries to find out how pervasive the problem has become, what factors are supporting thegrowth of counterfeit products in construction, and how buyers can best protect themselves.Explore35
“If someone is caughtbringing in a largeshipment of drugs,they will do hard time.However, if someonegets caught bringingin a shipment ofcounterfeit goods,they may get upto 18 months injail, and the finesare comparativelyminiscule.”— Edward MinchinThe company that manufactures thepopular Square D circuit breakers hasissued numerous recalls in recent yearsas they became aware of large cachesof counterfeit versions of their product infiltrating the market. They haverepeatedly raided illegal manufacturersin China and gone after several unscrupulous distributors in court, but officialssay that hundreds of thousands of faultycircuit breakers could still be in use.“Most often, the counterfeiters cutcost in these products by using less copper in the wiring,” says Brian Monks,vice president of anti-counterfeitingoperations for Underwriters Laboratories. That means that the wiring can’tactually handle the amount of electricityfor which it’s rated. “It will probablyfail, and sometimes it can start a fire.”Anyone standing in the vicinity of anexploding breaker would be subjectedto extreme heat and sprays of moltenmetal, according to a lawsuit filedagainst an independent distributor inGreensburg, Pennsylvania accused ofpushing fake Square D circuit breakerson an unsuspecting public. The Engineering News-Record story goes on tosay that officials felt that shutting downcounterfeiters was like playing an endless game of Whac-a-Mole.Minchin wheels a load of legitimate partsalong with corresponding knock-offs fromthe laboratory in Rinker Hall.Eric ZamoraCounterfeits can be difficult to spot without the original model for comparison.The fakes pictured beneath their authenticcounterparts on the next page could easilygo undetected. Sometimes an unusually lowprice may be the buyer’s only warning.36 Spring 2012
These bulk items ship to the U.S.by the millions, and even if a few cargocontainers are confiscated by inspecting authorities, enough of them usuallymake it through to keep the businessprofitable. New York City officialsreport that organized crime rings nowconsider counterfeiting to be a moreattractive line of business than prostitution or drugs, Minchin says. Andthe punishment doled out for theoffense is hardly a deterrent.“If someone is caught bringing ina large shipment of drugs, they will dohard time,” Minchin says. “However, ifsomeone gets caught bringing in a shipment of counterfeit goods, they may getup to 18 months in jail, and the finesare comparatively miniscule.”Monks says that education andraising awareness, including academicresearch projects like the University ofFlorida’s, are key in the fight againstcounterfeiting. The Department ofEnergy and other government agenciesnow provide preventative training foremployees. An executive with a largeenergy providertold the researchers that they had foundcounterfeit valves in a nuclearpower plant as part of their inspectionregimen.Surprisingly, Minchin says, mostof the counterfeit items identified inconstruction supply chains come fromvendors on the companies’ approvedvendors list. He found that manyrespected U.S. companies were not regularly updating their approved vendorslists and they were not testing materialsbecause they were dealing with a trustedsupplier.Builders and manufacturers would do well, the reportsays, to consult specialists likematerials and corrosion engineers whenever there is a questionregarding the integrity of a product.And when the source or qualityof a product used in a projectcannot be verified, managersmust be informed immediately so they can weigh potentialrisks.The report recommends that industry leaders should adopt a more formal,unified approach for tracking the originof products that will make it easier forbuyers to see who manufactured theproducts they purchase. They also suggest that a central database for documented cases of counterfeit goods alongwith identifying photographs should beestablished.Furthermore, the team says thatpeople in purchasing departments mustbe trained to spot telltale signs of acounterfeit business operation, and thatentire supply chains should be notifiedwhen a confirmed case of counterfeitproducts is found.But consumers have to do their partas well, says Monks. Products that looka bit off or are much cheaper than thesame name-brand item sold elsewhereshould alert the consumer’s spideysenses.“You have to do your own due diligence,” he says. “Call the manufacturerand check the serial numbers if you haveto.” You can’t assume that just becausea product is sold in America that is wasmanufactured to our standards.And most importantly — don’t besuckered in by a deal that’s too good tobe true.R. Edward Minchin, Jr.Associate Professor, M.E. Rinker Sr. Schoolof Building Construction(352) 273-1153minch@ufl.eduRelated website:www.counterfeitscankill.comExplore37
cords and circuit breakers are common items for counterfeiters as well. U.S. Customs and Border Protection agents confiscated 3.5 million worth of coun-terfeit circuit breakers in 2008, accord-ing to a special report in the Engineering News-Record that expanded on the UF t
