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CUSTOMERS HAVE THE RIGHT TO FAIR TRADE

Sales and service employees of replacement plasma cutting torches, leads and consumables manufacturers increasingly encounter confused customers. This confusion is often initiated by attempts from plasma cutting system Original Equipment Manufacturers (OEM's) to recover the market share they have lost to fair competition in the replacement torch, leads and consumables market. These companies often use questionable reasoning and tactics for this purpose.

THE 5 MOST FREQUENT "MYTHS

1.REPLACEMENT CONSUMABLES AND TORCHES WILL CAUSE EQUIPMENT FAILURE

At times, original equipment manufacturers (OEMs) state that the use of replacement products other than their own torches, leads or consumables will lead to a high risk of severe damage to the customer's torches, leads and even the power supply.

Of course, this is merely a fear tactic to pressurise the consumer. Many plasma cutting OEMs own an aftermarket company that sells replacement consumables for their competitor's systems, yet some OEMs accuse others of piracy for doing exactly the same. Modern plasma power supplies cannot be damaged or destroyed by the use of torches, leads or consumables from third-party production. Plasma systems are designed and built so that they can withstand unimaginable levels of interference without suffering serious damage. The systems are completely protected against continuous short circuiting so that instances of catastrophicconsumable failure, cooling outage, torch crash or incorrect operation will not cause damage to the power supply or its periphery equipment – completely independently of whether OEM parts or third-party compatible consumables are used. For example, the Thermacut® group sells more than 5.700 replacement torch systems around the world every year, and more than 1.400.000 consumable sets (electrodes and nozzles) to plasma cutting businesses. There has never been a single torch or power supply damaged as a direct result of using Thermacut® products. These facts speak for themselves!

2. ONLY OEM TORCHES, LEADS AND CONSUMABLES CAN OFFER UNMATCHED PERFORMANCE

Often, OEMs try to tell their customers that the service life or cutting performance of their own products is better than that of the large third-party providers. They argue that savings when purchasing the parts from a lower-cost third party provider would be offset by more frequent consumable change and loss of cutting performance.

This is contrary even to mere common sense! In the harsh competitive environment of users and service providers, no one is going to settle for less than best. The calculation of operating costs in relation to produced components is a part of daily business and a prerequisite for sustainable economic success. If the reasoning of the OEMs were credible, third-party product users would quickly return to the expensive genuine parts or leave the market. This is not the case. Many long-term successful and satisfied Thermacut® customers are proof for this. This has been proven in independent and objective examinations regarding service life and cutting performance of Thermacut® parts in relation to OEM parts.

3. A "SUPERIOR LEVEL OF SERVICE" CAN ONLY BE PROVIDED BY OEM TECHNICIANS

Often, OEMs claim that only their own technicians are capable of providing technically qualified consultation to end users.

Quite the opposite: Thermacut® service technicians are in continuous contact with their development departments, they receive regular training prior launch of all new products and are involved in future product development – so it shows that this level of commitment is not unique to OEMs. Continuous bilateral dialogue between field service technicians and development departments ensures that the service teams are always informed about new product and process developments, and that they are skilled in them. Vice versa, this ensures that the development department receives feedback on the products in actual cutting operations and are able react to the requirements and demands of the cutting technology users. Competence of the service teams in this area of user consultation and troubleshooting of course often exceeds that of the OEM service employees, since they not only have unilateral

company-specific know-how but actually have a greater knowledge of diverse manufacturers cutting systems and application specifications due to the wide range of Thermacut® products. This way, the customer will always receive the best available solution that the market has to offer – not just the best option from a single OEM.. 

4. YOUR WARRANTY WILL BE VOID

Some OEMs threaten their customers with the potential loss of claim to service and warranty repair if they continue to use other than genuine torch consumables. They say that in the future the user needs to return to the over-priced genuine parts.

This general refusal of service and warranty repair due to the customer's use of non-genuine consumables is not legally permissible in most countries.

e.g.: In EU-law: sect. 81 and 82 para.1 EGV or in the US according to Magnuson-Moss Federal Trades Commission Improvement Act and the directives on "patent misuse"!

Rather the warranty provider must explicitly prove that the damage caused is exclusively due to use of third-party consumables. There is not a single known case in more than 800.000 plasma cutting systems installed around the world. Be assured that the OEMs would expressly refer to it in their reasoning if there was one.

5. APPEAL TO MORALS

Once the OEM have come to the end of their reasoning, they may well try to spill crocodile tears in order to recapture the user's approval. They will appeal to the user's morals and describe the immense effort in research and development that was invested in the products.

The OEM insinuates that future innovation – also and specifically for power source technology – will not be possible in the future if the user does not buy its over-priced consumables. After all, the revenue is a fixed part of the development budget.

"This is nonsense of course" – the "Rockefeller principle" well known from oil lamps and printer cartridges, in which a product is offered below production costs to then make a profit later by selling overpriced operating materials or required consumables, will only work if the provider holds a market-governing monopoly position. Luckily, this is not the case for users of plasma cutting devices, torches and accessories. The claim made in this context is that third-party providers of consumables have no expenses for development and innovation which is not correct either.

For example, Thermacut® spends more than 5 % of its sales in the field of plasma for R&D. Improvement and specifically further development of present OEM technologies concurrently with clear benefits regarding service life and cutting performance for the users provide this and are essentially responsible for the sustainable economic success of Thermacut®. The best examples of this are the consumables technology Silver-EXTM for electrode innovations and Tungsten-EXTM for nozzle innovations. Let it also be noted that Thermacut® invests about 6 % of its plasma sales in new production methods and state of the-art highly efficient production machines every year to continue to provide customers with highest-quality torches, leads and consumables at attractive prices below the OEM price level. The hypocrisy of the above pleas to the purchasers' morals becomes clear when considering the following:

Hypertherm® as the largest OEM of plasma cutting systems in the world, happily offers copies of plasma cutting torch consumables through its subsidiary "Centricut®", Hypertherm® also sells copies of consumables of other well-known competitors through "Centricut®. Therefore, Hypertherm® makes a considerable contribution to the global business with replacement consumables, thus reducing the turnover of its OEM competitors. sells consumables of other well-known competitors. Therefore, Hypertherm® makes a considerable contribution to the global business with replacement consumables, thus reducing the turnover of its OEM competitors.

RESULT? ONLY MYTHS, BUT NOT REALITY.

This analysis of the reasoning or methods in which OEMs try to recapture their customers for the consumables business demonstrates that the OEMs seem to want to keep their customers confused. They use the customer´s lack of knowledge regarding technical and electronic interrelations to fuel fears that cause customers

to return to the OEM´s arms – much more expensive but allegedly more secure. They use questionable reasoning and claims that often leave them thin ice, legally speaking. However, it is also characteristic that these methods are usually only delivered orally in consultation meetings with the customer, in order to avoid the danger of conflict with the competition's management.

Every technology user should critically question this procedure and respond out of their own interest.

Hypertherm®, Centricut® are registered trademark of Hypertherm, Inc. Thermacut is no way affiliated with manufacturers above mentioned.

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