Prime Mover Magazine

Industry voice: Joseph L. Mejaly, Meritor

Meritor, headquartered in Troy, Michigan, is a global corporation providing drivetrain mobility and braking equipment for the transport industry and the related aftermarket. It’s new facility in Derrimut, Victoria, was designed to combine distribution, packaging and the remanufacturing under one roof. Joseph L. Mejaly, President Aftermarket & Trailers, has taken the opportunity to inspect the Australian flagship centre in person – and reveal his secret recipe how to explore a new market.

Q: Joseph, please tell us about your career path.
A: I’ve been with Meritor for 27 years, so I am almost an old timer. My career has primarily been in sales and marketing, mostly focusing on the aftermarket. I took the opportunity to become president of the aftermarket unit in 2005; and in 2008, I acquired the trailer business.
When Meritor decided to sell off to its automotive sector, the company created three distinct business units – a truck unit, an industrial unit and one unit dealing with aftermarket and trailers. And that’s what I am responsible for today.

Q: Why did you originally enter the transport industry?
A: There is no gripping story to why I picked the industry. I came out of college in the early 1980s, when interest rates were increasing and the unemployment was high, so I was not in a position to pick a specific industry.
The growth potential of the commercial vehicle sector was promising, though, and over my career I got into the segment. I began to like it because it was exciting and challenging; and in the aftermarket business, personal relationships still matter. I like the fact that we have to be more nimble and quick, and that our products can actually make a difference in the industry. To a certain extent, we are breaking the mould, I think.

Q: Did the industry’s character change in the past three decades?
A: 27 years ago, most companies thought of the aftermarket almost as an afterthought. Companies were selling spare parts to service vehicles that were down; and used to call such a division Service Parts.
But over the years, various companies have decided to transform into a professional aftermarket supply business. In fact, the aftermarket has become a significant component of any business’s profitability. Today, it has become mainstream for many companies in terms of revenue.

Q: How is Meritor different to competing companies?
A: Meritor’s aftermarket business pursues a very entrepreneurial model. It’s fairly self-contained from the parent corporation, and it’s very consumer-driven. Our product philosophy is servicing the entire life cycle of a vehicle. Therefore, we have to develop a product that services a person that has a brand new combination and a person that has a 15-year-old vehicle. Inside this ‘consumer continuum’ requirements vary, ranging from “the brand is important” to “the brand is irrelevant”, and from “high-priced” to “competitive pricing.”
As a result, we use a multitude of brands to suit the entire transport market. Across that inconsistent continuum we market all marques: We don’t only package and sell parts that fit Meritor production products, we sell products that address an entire product category.

Q: What do you think Australia is looking for at the moment?
A: The Australian market is very brand loyal, and we take this fact seriously because we think we offer a good brand. That does not mean there are no price sensitive buyers along the way. But in general, I think that Australia is very brand loyal, and we will not disappoint the expectations.
We know that we cannot compromise on quality, so we have made investments to make sure that all products entering our portfolio are of high quality. We have an in-house aftermarket engineering centre in Bangalore. So you can be confident that an Meritor product is something you can rely on.

Q: How did Meritor cope with the global financial crisis?
A: I am sure that the GFC will go down in history. Our children will read books about how we managed to get through the 2009 recession. And at Meritor, we are very proud about the way we managed it. We were not a company that filed any kind of bankruptcy, and we didn’t ask for money. We did it on our own, and we survived. But we had to take some hard steps. Every employee took a pay cut, and we all saw merits and bonuses go away for the year. But we had to watch our cash flow. In fact, a positive cash flow became almost as important as profitability. We are still watching it regularly, almost daily. Looking back, I think the crisis has galvanized the people, and the team spirit improved notably.

Q: How did the financial crisis affect the aftermarket division?
A: If a company invests in the aftermarket division at the right time - enabling it to grow organically - the down cycle will be tempered because you always have one revenue stream going for you. If you’ve made the right investment, you might not actually shrink, you might even grow in times of crisis. Our manufacturing business, for example, continued to grow even through 2009. So the aftermarket is a buffer that can help companies like us to get through a recession. The entire company can take some pride in that. The board has sensed that an investment in the aftermarket division would pay off, and it did.

Q: In one sentence, what is your work philosophy?
A: One word: competition. I’m a very competitive character. Growth, global expansion and competition motivate me every day.

Q: Are you still in touch with the base level?
A: Yes, that’s why I visited Australia. We’re having regular communication meetings all around the world, in China, India and Brunei, to stay in touch with employees all the time. I try to explore all new markets we approach on my own, because the place to start is the street. When we first commenced business in China, I went to the auto malls and walked around. You have to see how your product ends up before it’s being sold. Who’s selling it, how is it being presented? There is no better way to get to know a market than spending two days just walking around and talking to people. If you don’t understand the consumer, you can’t be in this business.

Q: What’s in store for the future?
A: A lot. We have terrific organic growth plans, based on three revenue pillars. One is the international distribution business. The second one is remanufacturing, we’ve tripled the size of that business in three years and we still only think we’re scratching the surface. And the third pillar is our 3PL business. For us, it subsumes everything we’ve built and it puts us in playing field where we think we have a right to play - which is distributing, packaging and servicing the commercial vehicle industry’s products. We box over a million cartons a month in our Florence facility in Kentucky. We remanufacture 7 million shoes a year, we recycle tons of steel through that process, and we’re still only playing in two markets, North America and Europe. We’re still young in the Asia Pacific region, but we have a lot of motivation.

Q: Thank you very much.